Jim Hamilton at Econbrowser takes us on a tour of the behavior of the RGDP components over the last few quarters:
Revisions to some of the key indicators bring us back to the same old story– the U.S. economy continues to grow, but at a slower rate than any of us would like.
The Bureau of Economic Analysis released on Thursday a revised estimate that U.S. real GDP grew at a 2.7% annual rate in the third quarter, up from the initial estimate of 2%. So things are better than we thought? Not really.
The revised figures do show an improvement of 0.4 percentage points in the contribution of exports, which are now claimed to have added about 0.2 percentage points to the 2.7% growth figure instead of subtracting 0.2% as originally reported. But this was erased by a 0.4 percentage point reduction in the contribution of consumption spending. More than all of the reported improvement from 2% to 2.7% GDP growth could be attributed to a higher rate of inventory accumulation than previously estimated. To put it another way, real final sales for the third quarter were originally reported to have grown at a 2.1% annual rate, whereas the new numbers have the figure at only 1.9%. The bottom line is that growth in demand for U.S. goods and services overall remains weak, even weaker than originally reported.
Note that by the time you finish reading the last paragraph you are confused about the ups and downs of the different components (even if eyeballing the chart). The only thing that sticks in one´s memory is the “bottom line”: “growth in demand for U.S. goods and services overall remains weak, even weaker than originally reported”.
But a sufficient statistic for that is how nominal spending is behaving. As the Chart below shows spending continues to languish far below trend (even if you presume the trend level has been somewhat lowered following the crisis).