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 3.3 percent in the second quarter of 2008,(that is, from the first quarter to the second quarter), according to preliminary estimates released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.9 percent.
Before we all get really excited about this, let's take a look at how we get the 3.3% number.
The GDP number is the end result of the following sub-areas.
Personal consumption expenditures: these are responsible for 1.24 of the 3.3% increase or 37.57% of the total. However, let's remember we had the government stimulus checks hit the economy last quarter. Without the stimulus checks, personal income growth would have been stagnant.
Gross Private Domestic Investment: this category was responsible for -1.82 of the 3.3 growth figure. In other words, this category completely eliminated any growth from personal consumption expenditures (which were also rigged higher by stimulus checks). So after these two figures, we have a net change -.58
Exports: This was the big reason for the change in the number. Exports were responsible for 3.10 of the increase -- or 93% of the 3.3% change. When we look a bit deeper into these numbers, we see that exports rose 13%. That's good. But imports dropped 7.6%. That's one of the biggest drops in a long time and indicates demand is dropping in the US. That's not good.
Government expenditures: are responsible for .76 of the 3.3 number or 23% if the increase. When government spending is responsible for nearly 25% of your GDP growth, you have big problems.
On the domestic side, we have an increase in consumer spending that was juiced with government stimulus. Domestic investment subtracted from growth.
On the trade side, a big drop in imports led to a larger increase in exports.
In other words, the great growth rate is the result of a mathematical construct, not solid growth.