Pretty Good Economic News
3rd quarter GDP grew a very healthy 7.2% according to the Dept. of Commerce
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 7.2 percent in the third quarter of 2003, according to advance estimates released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.3 percent.
The major contributors to the increase in real GDP in the third quarter were personal consumption expenditures (PCE), equipment and software, residential fixed investment, and exports. The contributions of these components were partly offset by a negative contribution from private inventory investment.
Not surprising that consumer spending fueled this boost, since that's the major component of our economy. As I speculated earlier this month, a lot of that appears to be due to the child tax credit checks this summer. Nice to see something good from BushCo policies, even though it's likely temporary and opens up a huge can of worms.
My main concerns are about sustainability, consumer debt, the Federal deficit, state budget woes and the job market. Consumer spending appears to have slowed this quarter--I've seen plenty of anecdotal (admittedly not quantitative) evidence to support that notion. So what we've just had is a short bounce and we'll recede back to the doldrums.
Further, we still seem to have a huge individual debt load that is only going to suppress further consumer spending in the long run. Not to mention saddling the states and ultimately our children with immense deficits at the Federal level. How are we going to pay for all this when new jobs still aren't being created fast enough even to cover new entrants into the workforce, let alone bring back the 3 million jobs lost since Bush took office?
That said, it's great to see business spending is starting to pick up and that the economy did grow at such a torrid pace last quarter. I'd like to take that as 100% good news, but with all the false starts we've had before, and the caveats above, I'm not convinced we're out of the woods yet. Here's hoping...