Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
  The first estimate for Q3 real GDP growth is 2.0% at an annual rate
Posted Under: GDP

Implications:  It would be hard to find a better example of the plow horse economy than today's report on third quarter GDP.  Real GDP grew at a modest 2% annual rate in Q3 and is up 2.3% from a year ago, nowhere close to either strong growth or recession.  Real "private" GDP (real GDP excluding government purchases) grew at a slower 1.6% rate in Q3, but is up a respectable 3% from a year ago.  Real final sales (real GDP excluding inventories) was up at a 2.1% annual rate in Q3 and is up 1.9% from a year ago.  In other words, the underlying trend in real GDP growth remains very close to 2%.  Notably, this trend continued in Q3 despite a drought that reduced farm inventories by more than in any quarter since 1983.  Look for a similar reduction in farm inventories in the fourth quarter followed by a rebound in the first half of 2013.  Perhaps the brightest spot in the report was that home building increased at a 14.4% annual rate in Q3, the sixth consecutive quarterly increase.  Despite continued tepid growth, the report does not justify the Fed's recent foray into a third round of quantitative easing.  The GDP price index was up at a 2.8% annual rate in Q3 and nominal GDP (real GDP plus inflation) was up at a 5% rate.  Nominal GDP is up 4% in the past year and also up at a 4% annual rate over the past two years.  This is very close to the Fed's long-term forecast of 4.5% and much too fast for a short-term interest rate target near zero percent.  Getting the economy growing faster requires changes to fiscal and regulatory policy, not monetary policy.  Hopefully, the election in eleven days will get us moving in that direction.

Click here for a PDF version.
Posted on Friday, October 26, 2012 @ 9:42 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L. P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
New Orders for Durable Goods Jumped 9.9% in September
Fed Doesn't Budge
New Single-Family Home Sales Rose 5.7% in September
Will the "Bernank" Resign
Obama and Romney Get Trade Wrong
Romney Promises to Label China a 'Currency Manipulator'
More Plow Horse
Existing home sales declined 1.7% in September to an annual rate of 4.75 million units
Home Building Soared in September, up 15% to 872K Units at an Annual Rate
No Recession Yet
Skip Navigation Links.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
Home |  Important Legal Information |  Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2017 All rights reserved.