Reply #5: GDP growth [View All]

[unlawflcombatnt]

The article is incredibly over-optimistic about the well-being of the economy. Also completely unbelievable.

Though the initially stated 3rd quarter GDP growth was 1.6%, it has already been calculated lower. The latest revision of September's Retail Sales was reduced by $2.2 billion. This directly subtracts $2.2 billion from 3rd quarter GDP growth. This reduces 3rd quarter GDP to 1.5%.

Many economists also believe the originally stated 1.6% should have been only +0.9%, had it not been for the artifactual (and unbelievable 26% increase in auto sales. In addition to that, the GDP deflator came in at only 1.8% (or 0.018), as compared to the 2nd quarter's 3.3% (or 0.033), and the previous several quarters' deflators of over 3 (over 0.03). Since the Nominal GDP growth is divided by {1 + the "deflator}," it means nominal GDP growth was divided by 1.018 to give the real GDP growth, while the previous quarter's Nominal GDP growth was divided by 1.033 {1 + .033} to give the real GDP The result is that the nominal GDP growth in the 3rd quarter was gave a higher real GDP than it would have otherwise.

In order for annual GDP growth to come out anywhere near 3.1%, 4th quarter GDP growth would have to be at least 3.2%, and there would have to be no further downward reductions of 3rd quarter GDP. Neither is likely. And 3rd quarter GDP growth will be downwardly revised. 4th quarter GDP growth will be much lower. In fact, some economists, such as Nouriel Roubini, are calling for 4th quarter GDP growth of 0.


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