HOW MUCH IT GREW: 11.5 percent rate in third quarter, after declining for seven consecutive quarters.
CONTRIBUTION TO OVERALL GDP: 1.22 percentage points of the 3.5 percent GDP growth came from investment, with nearly half that strength coming from a surge in residential construction, an area that had been plunging since 2006. Business spending on computers and other equipment showed gains but spending on commercial structures such as office buildings and shopping centers continued to decline.
PROSPECTS: Economists believe commercial real estate will continue to suffer, given high office vacancy rates and the difficulty developers are having getting new financing because of rising loan defaults on commercial mortgages. Housing is expected to keep rising, a forecast that is based in part on the expectation that Congress will extend and expand the current $8,000 tax credit for first-time home buyers, which is scheduled to expire on Nov. 30.
Another potentially good sign for economic growth: Businesses are expected to begin rebuilding inventories that have been drawn down sharply during the recession.
INCREASE IN DEFICIT: Widened by $17.9 billion in third quarter compared to second quarter.
CONTRIBUTION TO OVERALL GDP: Reduced GDP by 0.53 percentage points in third quarter.
PROSPECTS: Economists believe that trade, which had been one of the few areas of strength in the past year, will be basically neutral in the coming quarters as the growth in exports will be offset by gains in imports. The gains in exports, however, are expected to help certain industries.
HOW MUCH IT GREW: 2.3 percent rate in third quarter, slowing from 6.3 percent growth rate in second quarter.
CONTRIBUTION TO OVERALL GDP: 0.48 percentage points of GDP growth in third quarter came from the increase in government spending.
PROSPECTS: All the strength in third-quarter government spending came from a 7.9 percent rise in spending at the federal level, reflecting in part the boost from the stimulus program. That offset a 1.1 percent drop in state and local spending, where budgets have been hard-hit by the recession. The expectation is that the stimulus program, which is helping states weather the recession, will keep government spending growing in coming quarters.
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Trader disclosure: On October 29th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (AA), (BAC), (BX), (EEM), (MYL), (INTC), (MSFT), (VALE); Seymour Is Short (FXI); Grasso Owns (AAPL), (ABK), (BA), (C), (COST), (PFE), (WMT), (FAZ); Terranova Owns (IBM), (QCOM), (GS); Finerman Owns (BAC), (PDE), (TGT), (WMT); Finerman's Firm Owns (PDE), (FLS), (RIG), (TBT), (YUM); Finerman's Firm Owns (BAC) Preferred; Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO), (UNG), (TLT); Jon Najarian Owns (INTC) Calls, Jon Najarian Owns (AMD) Calls
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