First Estimate of Q3 GDP = +3.0%

This morning, we got the government’s first estimate of Q3 GDP growth, and it was 3.0%. That’s an annualized figure and it’s adjusted for inflation.

Three percent is a good number, and Q2 was 3.1%. Still, I’m far from convinced that we’ve broken from our 2% trend in this recovery. In expansions, the economy has normally grown at 4% or more. Everything seems to have changed with the turn of the new millennium.

With this recovery, we seem to have a very hard time stringing together three or four quarters in a row of above-trend growth.

Here’s an unusual chart but I think it makes an important point. This is real GDP divided by a 3% trend line. In other words, if the line is rising, then the economy is growing by more than 3%. If it’s falling, it’s growing by less than 3%. (Don’t worry about the y-axis numbers.)

What this shows is that starting in 2007, the entire trend of GDP changed. We used to expect 3% growth. Now that’s closer to 2%.

Posted by on October 27th, 2017 at 10:25 am


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