Gross Domestic Product, Third Quarter 2022
This morning, the BEA released its Advance Estimate of GDP for the third quarter of 2022.
Key Points
- Real gross domestic product (GDP) increased at an annual rate of 2.6 percent in the third quarter of 2022. In the second quarter, real GDP decreased 0.6 percent.
- The increase in real GDP reflected increases in exports, consumer spending, nonresidential fixed investment, federal government spending, and state and local government spending, that were partly offset by decreases in residential fixed investment and private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased.
- The increase in exports reflected increases in both goods and services. Within exports of goods, the leading contributors to the increase were industrial supplies and materials (notably petroleum and products as well as other nondurable goods), and nonautomotive capital goods.
- The upturn primarily reflected a smaller decrease in private inventory investment, an acceleration in nonresidential fixed investment, and an upturn in federal government spending that were partly offset by a larger decrease in residential fixed investment and a deceleration in consumer spending. Imports turned down.
GDP Deflators
- GDP: 4.1%
- Gross Domestic Purchases: 4.6%
GDP in Billions of Dollars
Real Gross Domestic Income (GDI) is not available in the advance report.
Real GDP Trends
Note that GDP has not returned to the previous trendline and won’t. Another recession is totally baked in the cake.
Government spending won’t come to the rescue again.
Very Weak Data
- Real Final Sales were 19,633 in the second quarter of 2021
- Real Final Sales were 19,897 in the third quarter of 2022
- That’s only a 1 percent rise in 5 quarters despite a 2.6 percent annualized gain in this quarter.
GDPNow Final Forecast
Yesterday I noted A Huge Surge in Government Spending Drives Up GDPNow Forecast
Kudos to GDPNow
- GDPNow: 3.1 Percent vs BEA 2.6%
- GDPNow RFS 3.1 Percent vs BEA 3.3 Percent
- GDPNow RFS Domestic 0.5 Percent to BEA 0.8 Percent
- GDPNow RFS Private Domestic 0.2 Percent to BEA 0.1 Percent
That’s a remarkable performance given huge swings in government spending in September and a surge in petroleum exports.
The US consumer weakened. Real final sales to private domestic buyers was a mere 0.1 percent annualized.
Recession Postponed
The recession was postponed, but not for long.
This post originated at MishTalk.Com.
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Mish
households have 52% of their money in currency & deposits, vs 35% for
people in the Eurozone and 14% for the US.”
succinctly, he does point out the problem.
of regarding money as cash balances, and the demand for money as the demand for
cash balances. The idea dates back to the early part of the 20th century in
Cambridge, UK, and has appeared so obvious it has held unquestioning sway over
all schools of economics.”
N-gDp is a subset of money flows, M*Vt, in American Yale Professor Irving
Fisher’s truistic “equation of exchange” (total physical
transactions, T, that finance both goods and services).
N-gDp is determined by the volume of goods & services coming on the
market relative to the actual, transactions, flow of money. Thus M*Vt
serves as a “guide post” for N-gDp trajectories.
Gross Domestic Product: Implicit Price Deflator (A191RI1Q225SBEA)
That’s stagflation.
As Leonard Da Vinci explained:
“My intention is to consult experience
first, and then with reasoning show why such experience is bound to operate in
such a way”…”Although nature begins with the cause and ends with the
experience, we must follow the opposite course, namely being with the
experience, and by means of it investigate the cause…“Before you make a general
rule of this case, test it two or three times and observe whether the tests
produce the same effects”.
The FDIC’s reduction in deposit insurance is
prima facie evidence.
Historical FDIC’s insurance coverage deposit
account limits (commercial banks):
• 1934 – $2,500
• 1935 – $5,000
• 1950 – $10,000
• 1966 – $15,000
• 1969 – $20,000
• 1974 – $40,000
• 1980 – $100,000 (started the decline in Vt)
• 2008 – $unlimited
• 2013 – $250,000 (caused taper tantrum and
the rise in the real rate of interest)