The GDP Report in 3 Graphics

Real GDP grew at 3.2% in the fourth quarter of 2013, according to the first estimate released by the BEA this week. This news is decidedly... not terrible.  You could spin it to be good news or just mediocre news.  But, assuming the estimate doesn't change much in subsequent revisions, we've now had two solid quarters of growth.

The first graphic shows real GDP growth since 2003, by quarter.  Recession periods are shaded and the dashed line shows the long-run average of 3%.  For the year 2013, real GDP grew at 1.9%. Though this isn't too impressive, it's understandably driven by poor performance in the first quarter.


The second graphic shows the long-run path of real GDP, going back 50 years.


Finally, we can zoom in on real GDP over the past twenty years along with a trend line.  This graphic clarifies the mediocre nature of growth in the wake of the Great Recession.  At some point, we hope that growth can restore GDP to the long-run trend line.  There just hasn't been any bounce coming out of that last recession.


Keep in mind, this is just the first estimate for 2013 GDP and subsequent revisions can be significant.

GDP news gets better yet

The third (and final) GDP estimate for the third quarter revised growth up yet again, this time to 4.1%.  This figure indicates that growth was stronger in the third quarter than at any time since the end of 2011. The graph below shows quarterly growth rates since 2003.
Notice that 4.1% is larger than all but one quarter since before the Great Recession.  These are the kinds of growth rates we need if the economy is to truly recover from the Great Recession.  Finally, the revisions indicate that more of the growth came from consumption than previously thought.  The table below shows how each of the four categories of GDP spending contributed to overall growth. GDPTable2013.III

The takeaway:

  1. GDP growth in the third quarter was higher than all but one quarter since 2006.
  2. The new data shows greater growth in consumption.

GDP growth revised up to 3.6%

This week's GDP report, the second GDP estimate for the 2013 third quarter, brings good news, though perhaps not as good as it seems.  The report revised the growth rate up to 3.6% (the first estimate was 2.8%).  Quarterly growth data since 2003 is graphed below.

There is nothing wrong with 3.6%.  After all, that is the best single quarter since the end of 2011.  On the other hand, the big growth came to business inventories which contributed almost half of the GDP growth of the period (1.68 of the 3.6%). 

Here is the breakdown of the contributions from the four major components of GDP:

  • Consumption: +0.96%
  • Investment: +2.49%
  • Government: +0.09%
  • Net Exports: +0.07%

Remember that private inventory is part of investment.


Real GDP up 2.8% in Third Quarter

Real GDP grew at 2.8% in the third quarter of 2013, according to the advance estimate released today by the BEA.  This growth rate is very close to the long-run average growth rate for U.S. real GDP, which is 3%.  The graphic below plots quarterly GDP growth rates since 2003.


If this number holds up, it is the strongest growth the U.S. economy has had since the first quarter of 2012.  Keep in mind, this is the first estimate (also known as the advance estimate), and will be revised twice over the next two months. 


Sluggish GDP Growth for First Quarter

Today, the Bureau of Economic Analysis released the third and final GDP estimate for the first quarter of 2013.  The estimate of real GDP growth is 1.78%, which is positive. However, it is still well below the 3% historical average (based on the past 50 years).

The first figure below shows the quarterly growth rates for real GDP since 2003.  Since the Great Recession, real GDP growth rates have been relatively low, especially considering the economy is technically in recovery mode.


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