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Why Stronger Summer Gdp Is Horrible News

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Why Stronger Summer GDP Is Horrible News (November 15, 2013) This article talks about how the initial numbers on GDP were actually higher than first recorded. Economists are now saying that the U.S. economy most likely grew above a 3% annual rate in the third quarter, which is more than .2% higher than the government’s initial reading of 2.8%. This was due to a report this past Friday that showed a larger-than-expected gain in some September inventories.
• J.P. Morgan Chase and Barclays economists uped their estimates to 3.1%.
• Pierpont Securities economist Stephen Stanley put the growth rate at 3%.
• Macroeconomic Advisers had their tracking estimate at an enormous 3.3%
At a 3% pace, this GDP growth would be the fastest since the first quarter of 2012, a slight improvement for this economy which has been stuck at a 2% expansion since the recovery began in mid-2009. GDP growth has exceeded 3% only four times since the recession’s end.
The article goes on saying on how the headline figures in economic reports often obscure troubling trends below the surface. So the buildup in inventories, for example, essentially means many goods produced by the economy over the summer went unsold, and are now left on stores’ shelves.
A Commerce Department report on last Thursday showed the government most likely underestimated the negative impact of the trade deficit in its third-quarter GDP estimate. The U.S. trade gap with other countries widened 8% in September from August, as exports fell and imports climbed, the agency said Thursday.
So the bottom line: With inventories now stocked at higher-than-expected levels, firms will have less incentive to order more goods from factories in the fourth quarter unless sales pick up significantly.
With consumer and business spending particularly weak in the third quarter, a big boost in fourth-quarter sales isn’t expected. Many

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