GDP

Normally, I wouldn’t comment on any single economic release, but today’s GDP revision adds to the mounting evidence of a strengthening US economy. GDP growth in the third quarter was revised up to 5.0%, the fastest annualized pace since 2003 (see graph below).

This was not a case where the headline misled: all of the underlying components (except net exports) were revised higher. Corporate profits as a percentage of GDP reached a record high (see graph below). Following a 2% decline in output in the first quarter of the year, the economy racked up gains of 4.6% and now 5%.

GDP growth will likely slow from here (the economy is tracking around 3% growth in the fourth quarter). The decline in the price of oil is not a harbinger of imminent recession or of impending deflation. The economy is growing a little faster, inflation pressures are not yet evident, monetary conditions remain accommodative. Santa is being generous this year, and we are grateful.

• 14 Apr, 2020

  (Not Yet) Beach Reading

  Its not quite beach weather yet, but as we are all locked in our houses waiting out this virus, we may have found a ...

• 16 May, 2019

  Bring Home the Bacon

  Bacon sure is popular. McDonalds, which probably has the best pulse on Americans culinary tastes, introduced Cheesy ...

• 18 Feb, 2025

  Fireside Reading

  Three nonfiction and three fiction recommendations for your fireside reading. Enjoy!Rat City, Jon Adams & Edmund ...