GDP Growth

The Bureau of Economic Analysis has reported that the gross domestic product grew by 2.7% in the 3rd quarter of 2012:

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.7 percent in the third quarter of 2012 (thatis, from the second quarter to the third quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.3 percent.

The GDP estimate released today is based on more complete source data than were available forthe “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.0 percent (see “Revisions” on page 3).

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, federal government spending, residential fixed investment, and exports that were partly offset by negative contributions from nonresidential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased slightly.

That’s certainly better than shrinking or growing more slowly but it’s about average for the U. S. economy from an historical standpoint. It’s not nearly as high as predicted by the Obama Administration back in 2009 and it’s not fast enough to bring the millions of people who are unemployed, underemployed, or discouraged back to work. We need to do better.

Unfortunately, I just don’t see any proposals on the table that would result in significantly faster growth.