Friday, October 26, 2012

US GDP Grew 2% in Third Quarter

The Commerce Department released GDP data for Q3.  The economy grew 2% versus 1.3% in Q2 and 2% in Q1.  The housing sector shows signs of improving and consumer spending, which is around 70% of GDP, was up 2%.  Defense spending grew by 13%. 

On the negative side, exports declined from 5.3% growth in Q2 to 1.6% in Q3.  Exports are obviously affected by slow growth in Europe and elsewhere.  Business investment also slowed down as forward looking businesses keep an eye on the looming fiscal cliff due to dysfunction in Washington.  Unless Congress takes the proper actions, taxes will rise and government spending will drop substantially.  That could send the economy back into recession.

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