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GDP Details: Where the Economy is Growing

The final numbers for Q3 GDP came in this morning, showing the economy contracted by 0.5%. The forecast for Q4 is that it will drop significantly more. The chart below shows that the contraction is still lower than the 1.4% drop we saw in Q3 2001 and the 3% drop we experienced in Q4 1990.

A few weeks ago, the National Bureau of Economic Research (NBER) declared that the current recession started in December of last year. Although the common definition of a recession is two consecutive quarters of negative GDP, we can see that the NBER believes the current decline is being driven by erosion than began months ago when the overall economy was still growing.

In the current decline, there are areas of the economy that are growing, especially government spending. Here is a breakdown of Q3 numbers at an annual rate:

  • Real GDP: Down -0.5%
    • Personal Consumption Expenditures: Down 3.8%
      • Durable Goods: Down 14.8%
      • Nondurable Goods: Down 7.1%
      • Services: Down 0.1%
    • Gross Private Domestic Investment: Up 0.4%
    • Exports: Up 3.0%
    • Imports: Down 3.5%
    • Government Consumption & Expenditures: Up 5.8%
      • Federal: Up 13.8%
      • State & Local: Up 1.3%

On the news, the futures were mixed this morning. On the open, Dow stocks Alcoa , Merck , General Electric , JP Morgan Chase , and Chevron were trading to the upside.

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