Here's The Main Driver Of Today's GDP Surprise

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http://www.businessinsider.com/q3-gdp-government-spending-2012-10



Today's Q3 GDP release beat expectations – the economy grew 2.0 percent in the third quarter, according to this first reading, while economists expected a 1.8 percent gain.

The main reason the report cited for the acceleration in Q3 GDP growth from Q2's 1.3 percent rate was "an upturn in federal government spending," which was a positive contribution to GDP since the third quarter of 2010.

And the primary driver of the spending increase came from investments in national defense.

In fact, defense spending amounted to 0.64 percentage points of the 2.0 percent rise in GDP (click to enlarge):




Read more: http://www.businessinsider.com/q3-gdp-government-spending-2012-10#ixzz2APbtH8BL

[ProSense]

1. Increased government spending is good, and

Economic growth exceeds expectations, picks up steam

By Steve Benen



In the final report on the state of the overall economy before the presidential election, it appears economic growth not only picked up a little steam in the third quarter, it also exceeded expectations.

The U.S. economy grew 2.0% in the third quarter, fueled by higher consumer and government spending and more home building, according to a preliminary government estimate. Economists surveyed by MarketWatch projected gross domestic product would rise to 1.7% from 1.3% in the second quarter.

Consumer spending, which has the biggest impact on GDP, rose 2.0% in the July-to-September period, compared to 1.5% in the second quarter. Real final sales of U.S.-made goods and services advanced 2.1%, compared to 1.7% in the prior three-month period. Government spending jumped 3.7%, the biggest increase since mid-2009, mainly because of higher defense outlays. Also, investment in housing surged 14.4%.

For those keeping score, the United States has now seen economic growth in 13 consecutive quarters, which represents a sharp turnaround from the economic contraction we saw at the height of the Great Recession four years ago. The news also contradicts the notion that "uncertainty" out of Washington is leading to slower growth.

In terms of the politics of the report, I suspect Republicans will offer two kinds of arguments. The first is that 2% GDP growth is inadequate, and this will definitely have some merit -- given the severity of the recession, and how much ground there is to make up, everyone would like to see even more robust growth. That said, the enormous progress over where we stood when President Obama took office should be obvious to anyone who cares about the facts (and arithmetic).

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http://maddowblog.msnbc.com/_news/2012/10/26/14719814-economic-growth-exceeds-expectations-picks-up-steam