Friday, October 28, 2011

So Much for the Double Dip Talk

From the BEA:
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 2.5 percent in the third quarter of 2011 (that is, from the second quarter to the third quarter) according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.3 percent.
Yesterday, SilverOz (not NDD, sorry) took a preliminary look at the numbers and concluded
I just wanted to take a quick look at Q3 2011 GDP, which I think is actually a bit better (the internals) than what the headline shows. The advance headline of up 2.5% was in line with expectations and is generally speaking a less than stellar number, but the breakdown may be a bit more promising.
I agree

First, consumer spending is back, increasing 2.4%,  But the best part of the number was the 4.1% increase in durable goods purchases.  This tells us that -- despite low morale -- consumers are buying bigger ticket items.  Service purchases -- which have been a big reason for the continued increase in PCEs -- also increased at a 3% clip.

Non-residential investment increased at a 16.3% clip -- a very healthy pace.  Equipment and software expenditures increased 17.4% -- indicating that businesses are more than willing to invest in their own infrastructure.  And non-residential structural investment increased at a 13.3% rate -- another strong improvement.  

Exports -- which have been a driver of the expansion, increased at a 4% rate while imports increased at a 1.9% rate. 

As NDD pointed out, had it not been for a contraction in private inventories, the overall growth rate would have been over 3% (inventory adjustments subtracted a little over 1% from the overall growth rate).

I'll be looking at this data in more detail all next week, but for now, the number and the internals are pretty encouraging.