Zombie recovery

29 October 2010 By Martin Hutchinson

Thirdquarter GDP shows imbalances rising. The gain in chained dollar GDP was equaled by the growth in net imports and exceeded by the rise in inventories. Consumption was solid but government spending rose sharply as the savings rate fell. It s not an altogether pretty picture.

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The advance estimate of U.S. GDP for the third quarter of 2010 showed an annual rate of increase of 2.0 percent. Inventories rose by $116 billion in the third quarter, more than the $66 billion increase in chained dollar GDP and contributing 1.5 percentage points to the growth rate. Real final sales rose at a 0.6 percent annual rate.

Real exports increased at a 5 percent rate in the third quarter while real imports increased at a 17.4 percent annual rate; net imports increased $66 billion. Personal consumption expenditures increased at a 2.6 percent annual rate, real fixed investment rose at a 0.4 percent annual rate and federal government expenditures rose at an 8.8 percent annual rate. Real residential investment fell at a 29 percent annual rate.

The GDP deflator rose at a 2.3 percent annual rate; the PCE deflator rose at 1 percent, while import prices fell at 7 percent. The personal savings rate was 5.5 percent, down from 5.9 percent in the second quarter.

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