U.S. GDP Grew at a 5.2% Rate in the Third Quarter, Even Stronger Than Indicated

https://www.cnbc.com/2023/11/29/us-gdp-grew-at-a-5point2percent-rate-in-the-third-quarter-even-stronger-than-first-indicated.html

by Judyrabbit • 3 years ago

119 164 3 years ago

cnbc.com

andrewmutz• 3 years ago

Amazing that the US economy is growing at a faster rate than the Chinese economy:

https://www.reuters.com/world/china/chinas-q3-gdp-grows-49-y...

berserk10103• 3 years ago

REAL, unofficial Chinese gdp is probably at near 0% or negative. you don't get 20-30% decline in all metrics like export, import, home price, tax revenue, land value, employment, salaries, etc etc and still have 5% gdp growth.

There's a reason why Xi Jing Ping came begging for relief in APEC San Francisco. Which he got none.

thisgoesnowhere• 3 years ago

How was he begging for relief?

cced3• 3 years ago

Trust me bro

somenameforme7• 3 years ago

Deficit spending is considered part of the GDP. Print a quadrillion dollars and we could have thousands of percent GDP growth! Part of the reason that GDP can be a highly misleading metric. The article alludes to this in a pretty amusing way:

---

"The U.S. economy grew at an even stronger pace then previously indicated in the third quarter, the product of better-than-expected business investment and stronger government spending.

...

Government spending also helped boost the Q3 estimate, rising 5.5% for the July-through-September period. However, consumer spending saw a downward revision, now rising just 3.6%, compared with 4% in the initial estimate."

---

candiddevmike• 3 years ago

Yea everywhere is glossing over this... What would the GDP be without government spending? How much longer can the government float the economy?

4death43• 3 years ago

GDP is inflation adjusted, so simply printing money won't work unless you also control inflation (although I will say I don't think the inflation calculation necessarily reflects the true value of the dollar).

magnio• 3 years ago

The US reports GDP growth as annualized growth rate, which is the annual rate that would occur if the QoQ rate is maintained for a full year. To get the QoQ rate, we need to roughly divide the rate by 4 (not exact but not far off). This means the US GDP grew 1.3% in the third quarter, matching that of China.

Have to say the concept of annualized GDP growth rate is kinda gobshite. Why would you report that instead of YoY and QoQ rates is beyond me.

throwawaymaths4• 3 years ago

GDP is itself kind of a shite metric, annualizing a quarterly is just a drop in the bucket

stefan_• 3 years ago

Yes, we know what annualised means. People also report annualised inflation and many other things this way.

Pick a metric, report it consistently, it really doesn’t matter too much exactly which you choose.

(It is ironic you would compare to China because of course their GDP reports are made up. I’m sure they use non-annualised though!)

anonylizard• 3 years ago

The bad news is the US has a ballooning, titanic budget deficit that is at wartime levels and is completely unsustainable. Greece too can have booming economies when the government is raking up debt.

The good news is there are genuine, revolutionary innovations in the economy, namely AI. You can't explain away AI as a mirage propped up by government spending.

The entire stock market is held up by the magnificent 7, and these stocks in turn are held up investors' AI dreams.

JohnMakin• 3 years ago

How will AI possibly help the economy? if it achieved even 1/10th of what the techno optimists think, you’ll see massive unemployment and likely collapse of credit markets that have been hanging on for a thread for a long time (like the trillions in student loan debt).

I just can’t possibly see how AI is going to revolutionize the economy, unless you define the “economy” as the nasdaq, then yea, i guess so, but that’s a real simpleton view.

guelo3• 3 years ago

Deficit doesn't seem that bad: https://fred.stlouisfed.org/series/FYFSDFYGDP

2023's number will probably come in better than Trump's pre-pandemic deficit.

anjel• 3 years ago

You can finance amazing amounts of deficit spending when the world overwhelmingly desires to store its wealth in Dollars...

lmm2• 3 years ago

You can't explain away AI as a mirage propped up by government spending.

You absolutely can. Like, sure, it can generate crap quickly, but whether that translates into genuine productivity improvements is not really proven yet.

imtringued• 3 years ago

Greece too can have booming economies when the government is raking up debt.

That is not a good example. Greece was growing 5% back in those days and it was growing fast enough to outpace the debt. In fact, most of the debt to GDP explosion happened after the austerity policies, because GDP crashed and debt stayed the same. Greece didn't really have a spending problem either but rather the problem is the rampant tax evasion, i.e. there was a collection problem. Once the arm chair experts of the Troika got their way, Greece went downhill faster than from the original debt crisis.

wholesomepotato3• 3 years ago

What's amazing about it if the debt increased more in the absolute terms? :D . If I max out credit cards I can at least show spending (GDP) growth at least the same as what I borrowed...

How is it not obvious to everyone that this is the end game? Increasing rates will rapidly increase debt, which increases inflation, which pushes increasing rates ...

avmich• 3 years ago

Whoever's lived long enough in USA would laugh about end game questions. Inflation? 3.2% is absolutely peanuts to what it was some 3-4 decades ago. Unemployment? Are you kidding? Pandemics? Did you compare what it is today with what it was 2 years ago? COVID is just 4th - which is a lot, but very far from mortal danger - cause of death, and the country even inches up in life expectancy. All fundamentals are pretty much positive, and only debt/GDP is vaguely comparable to the worst numbers in US history.

Now, what about alternatives? If you don't like US numbers, can you get anyplace better on Earth? I'll wait. Meanwhile, there are forward-positive questions and topics - USA is about to jump in 2, count 'em, two very consequential areas, which are AI and space exploration, within this decade. Are you sure your better bets are against USA? Did you take the history lessons into account, or it's business as usual?

uoaei• 3 years ago

Your regular reminder that the US is the only country to represent quarterly GDP growth as an annualized rate.

rblatz• 3 years ago

So more interest rate hikes?

appplication• 3 years ago

GDP growth is not inflation and not something that needs to be intentionally limited, so not necessarily.

somenameforme7• 3 years ago

While this is true, it's also true that GDP growth driven largely by governmental deficit spending, which this was, is inflationary.

1letterunixname2• 3 years ago

I'm betting is mostly due to inflation from the post-pandemic price-profit spiral. At one point, 60% of inflation was due to excessive corporate profits.

phonon2• 3 years ago

This already is the inflation adjusted number. Non-inflation adjusted was 8.9% growth.

https://www.bea.gov/sites/default/files/2023-11/gdp3q23_2nd....

1letterunixname2• 3 years ago

And those numbers are themselves are de facto lies because they don't adequately represent the rises in costs of inelastic demand items such as food that harm individuals. "Macroeconomics" to the point of hiding harms to large swaths of C that aren't billionaires with C billionaires, G, I, and NX.

akomtu• 3 years ago

That's the chart of top 1% vs bottom 90%:

https://fred.stlouisfed.org/graph/?g=G4YR

judge20202• 3 years ago

I do think the Fed's stunt with 2-3% interest rates in 2020-2022 was an effort to further concentrate wealth up the stack. Everyone who could buy/refinance did and will likely stop moving for the foreseeable future, as the same house would cost at least 33% more per month thanks to the higher interest rate alone.

throwawaymaths4• 3 years ago

Increasing interest rates should have the reverse effect. A lot of crazy financial instruments depend on low interest rates to work. When interest is increased, the price of money goes up; the wealthy are bouyed far more by ZIRP than someone say in the tenderloin, who does not have access to high finance.

wolverine876• 3 years ago

Is there evidence?

landemva2• 3 years ago

Fed's stunt with 2-3% interest rates in 2020-2022

Really?

Fed funds rate was about 2.5% in 2019, because Fed raised rates when Trump took office. Fed funds rate scraped zero in 2020 and 2021.

https://fred.stlouisfed.org/series/fedfunds

alberth2• 3 years ago

This can be explained by the 1st graph in link below.

https://www.pewresearch.org/short-reads/2022/04/20/how-the-a...

Essentially, more people (as a %) are upper income today than ever.

yibg• 3 years ago

How does that affect how many people are in the top 1 percentile or bottom 50?

7e• 3 years ago

We should really be trying to maximize a human happiness metric with the _minimum_ amount of GDP. Quantifying that is a challenge, but if we don’t start, we’ll never get there.

The28thDuck2• 3 years ago

A free gaming console for every household!

SantalBlush2• 3 years ago

The problem is, how do we accurately measure that happiness? Economists would be first in line to use that measure. They know GDP is flawed--unpaid domestic work isn't included, for example--but it's the best they have. There is a ton of econ literature stating as much.

Using dollars spent as a measure of happiness is unfortunately the best we can do (so far).

elashri• 3 years ago

The failure of this metric as measure of happiness is very obvious. I can be rich person (relatively rich not that rich) and are spending a lot of money on my health problems who are making my life hell. With such metric this indicates that I'm living my best days.

somenameforme7• 3 years ago

The answer to this always seemed self evident - ask people. Obviously this will be exceptionally subjective, but the entire point of all of these ostensibly "objective" metrics is to work to maximize the subjective metrics. Nobody gives a fly fark if a GDP is 37 or 38201784, but everybody cares about which place offers a more pleasant life.

When those objective metrics do map strongly to the subjective metrics, then it's awesome. But the problem is that in practice near to any objective metric can be completely and utterly gamed in, more or less, "honest" ways. Essentially, a government can find ways to increase it without increasing the things that it's supposed to represent. But you can't game how people themselves perceive things without outright lying and fraud.

The subjective metrics would also measure things objective metrics fail on hard. For instance war, as the aggressor or 'backer', is absolutely awesome for near to every economic metric. And national "defense" was one of the big winners in this GDP report. But do these wars provide a subjective quality of life improvement, or deterioration, for people? Basically I don't think the goal of the government should be to provide value to shareholders. That's the point of private industry and capitalism at large. The point of the government is to create a desirable state of life for people living within a country.

reissbaker• 3 years ago

I agree with maximizing human happiness, but why with a minimum amount of GDP? What's the goal of having low GDP?

virgildotcodes• 3 years ago

Seems like the idea is to minimize consumption in a finite world.

jorisboris• 3 years ago

Not sure if correlated to happiness, but I wonder if we can measure the % of population who gives a f** in a country.

In some countries people seem totally disconnected and frustrated (France, Italy come to mind), in others people feel a personal responsibility to make their country a success (Scandinavian countries come to mind)

That to me seems a better indicator for the future

nradov• 3 years ago

GDP has issues, but happiness isn't a sensible metric to optimize either. If you take heroin then you'll be happy ... for a while.

The28thDuck2• 3 years ago

Nothing quite like closing the article on a zinger.

“ Corporate profits accelerated 4.3% during the period, up sharply from the 0.8% gain in the second quarter.”

Won’t anybody think of the corporations??

distortionfield• 3 years ago

This is more and more why I think that layoffs are almost viral in nature. I swear to god, it gets in the air sometimes.

Racing04612• 3 years ago

Unemployment/GDP/<insert other stat here> are pretty much vanity metrics for the average family.

Doesnt really mean anything if rent is double and gas is 5$ a gal. It's actually even more insulting when the gov is telling you how good you have it.

4death43• 3 years ago

It's actually even more insulting when the gov is telling you how good you have it.

I agree that these aren't the best times the country has ever seen, but, objectively speaking, things are pretty good. Just as an example, gas is $5 a gallon (it's actually $3.40). But, where is it cheaper? Belarus? Is that really where you want to live?

FpUser2• 3 years ago

"But, where is it cheaper? Belarus? Is that really where you want to live?"

Why the fuck would we compare our lives to Belarus, Zimbabwe Ethiopia / etc. Let them sort their own problems. I can compare my country (Canada) to what it was 30 years ago and I do not like where we are going.

ALittleLight• 3 years ago

Just looking at gasoline prices is misleading. You need to look at how much people spend on gas, and on cars, insurance, maintenance, parking, commute in traffic etc. If gas is more expensive in Barcelona, but I can walk to work or take the subway there then quality of life might be much better there even with higher gas prices.

Regarding the times objectively being pretty good, it depends what objectives you're using. Measures of consumer sentiment, for example, are similar to the 2008 financial crisis.

I would think if your metrics all say the economy is good and people mostly say it's bad, then your metrics are probably broken.

SantalBlush2• 3 years ago

Look up GDP, unemployment rates, and inflation rates during the Great Depression and then tell us GDP and unemployment are vanity metrics.

I think you actually might not know how good you have it.

jeffbee3• 3 years ago

Retail gas prices have been just about flat for 50 years. Energy expenses as a fraction of GDP have never been lower. Household spending on motor fuels is also historically low. I really have no idea why people point to gas prices, which are objectively dirt cheap.

landemva2• 3 years ago

Flat? Not in the USA where I lived. A gallon of gas was 0.99 in 1999, and also 0.99 for a brief time in 2020. It is now $3+.

Racing04612• 3 years ago

Energy expenses as a fraction of GDP have never been lower

This is the kind of bullshit i'm talking about.

nopromisessir• 3 years ago

We have armies of econ grads measuring baskets of goods to account for this and report it in various metrics.

Try a search "cost of living basket of goods" for more info.

Worry not, despite unrealistic public expectations and wanton reductivism bred from saltiness regarding wealth's stubborn unwillingness to consistently grow without effort... We actually can measure a lot of useful things.

Worry not.

BenFranklin1002• 3 years ago

This is good news but to sustain (or even increase) this growth, the US needs to address the housing crisis. The housing shortage is best viewed not so much as too few homes overall nationally, but too few homes in job-rich regions where people want to work and live. Hsieh and Morrietti estimated the resulting spatial misallocation of labor lowered aggregate GDP growth by 50% between 1964 and 2009:

https://www.nber.org/system/files/working_papers/w21154/w211...

That is, businesses can’t find the needed local workers to expand, and workers lack access to good paying jobs. Remote work is helping, but still, the problem is estimated to have gotten much worse recently with the surge in home prices over the last 15 years.

TLDR: fix the housing problem, and the economy will be able to sustain higher growth.

jeffbee3• 3 years ago

There's been some robust discussion about the Hsieh-Moretti result recently. These tweets link to some of it: https://twitter.com/otis_reid/status/1725610847072879030

BenFranklin1002• 3 years ago

Thanks, I recall there being some debate about the magnitude of the effect, but if recall correctly, some authors argued the problem was even worse than Hsieh-Moretti thought originally?

Whatever the actual percentage, it makes intuitive sense a spatial misallocation of labor and capital will hurt economic growth.

ethbr1• 3 years ago

Additionally, there's the problem of home ownership trending in the direction of exacerbating income disparities, by shifting rental income and property value gains to investors instead of new homeowners.

waveBidder2• 3 years ago

land value tax would solve this…

stjohnswarts2• 3 years ago

I'm looking to sell and move permanently overseas if Trump wins next fall, I'm planning on setting up a contract position in Europe well before that and watch and vote from abroad.

rr808• 3 years ago

No its better to enable WFH so people will live where the houses are not where the offices are.

larsiusprime• 3 years ago

This will have (and already has had) the predictable effect of increasing the price of houses where everyone moves to in order to WFH.

stjohnswarts2• 3 years ago

we are not going to sustain 5% growth. 2-3% is about as much as we'll get over the long haul

AnimalMuppet• 3 years ago

That is, businesses can’t find the needed local workers to expand, and workers lack access to good paying jobs.

Those are compatible problems. You need more workers to expand? Pay them. You'll get them. The jobs that can't (or won't) pay workers more will be the jobs that don't get filled. Those are the jobs that don't produce enough value to be worth paying decent money, and they are exactly the jobs we want to go unfilled.

elfbargpt• 3 years ago

I saw a story today about a new Chinese cancer drug. It retails for 280 USD in China, and for 8,820 USD in America.

American GDP growing 30x the rate of China's, incredible!

cced3• 3 years ago

Don’t forget credit card interest payments! GDP! Student loan payments! That also goes towards GDP! Great products! 30 years of mortgage interest? You guessed it, GDP!

Copium and GDP for everyone!

Anyone look at PPP or is that metric too inconvenient?

dr_dshiv• 3 years ago

Yeah, because with PPP China already has a bigger economy than USA.

Edit for the downvoters: China’s 2022 GDP based on PPP is $31.5 trillion vs the USA’s $23 trillion. That’s 37% bigger. Source: https://www.worldeconomics.com/Country-Size/China.aspx

chii2• 3 years ago

American GDP growing 30x the rate of China

it merely shows how much richer americans are compared to the chinese.

A drug is quite often an inelastic good - someone who is dying will, with very high probability, pay the maximum price they could afford for the drug.

valzam• 3 years ago

Is this nominal or real GPD? It's not surprising that GDP can grow in a high inflation environment, doesn't mean anyone is better off for it.

phonon2• 3 years ago

Non-inflation adjusted was 8.9%.

https://www.bea.gov/sites/default/files/2023-11/gdp3q23_2nd....

pcurve• 3 years ago

Believe it or not, real GDP. Straight from the BLS.

"Real gross domestic product (GDP) increased at an annual rate of 5.2 percent in the third quarter of 2023 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.1 percent."

tenpies• 3 years ago

I believe it, but only because I've also watched the adjustments to CPI methodologies.

What I can't believe is that serious people still take the BLS's CPI number seriously.

hmm373• 3 years ago

The last I checked regarding Q3, was that most of the growth was due to consumption, but most of that consumption was fueled by debt. The prior Q2 consumption was suppressed, and it seems that everyone was forced to restart consumption in Q3.

Iwan-Zotow2• 3 years ago

Less than $150BN until $34 trillion

tim333• 3 years ago

There's been a lot of spending on credit cards and the like but default rates are heading up such that it quite likely won't go on like this that much longer.

https://twitter.com/GameofTrades_/status/1728820920649670923

lr1970• 3 years ago

How the inflation was factored in in calculation GDP growth? If inflation is under-counted than GDP growth will be artificially inflated.

U.S. GDP Grew at a 5.2% Rate in the Third Quarter, Even Stronger Than Indicated

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