America’s recovery: Better faster than slower

Posted: October 26, 2012 in economy
Tags: , ,

IT ISN’T difficult to be the least dirty shirt in the hamper these days. America’s economy seems to relish the role, continuing to post growth performances that would be utterly disappointing were they not so much better than those managed by other rich countries. Real output rose at a 2% annual pace in the third quarter, reported the Bureau of Economic Analysis this morning. That’s miles better than Europe, which remains stuck in recession. It also marks an acceleration from a second quarter in which growth clocked in at just 1.3%. Yet it’s still far too little given the gap between actual output and what the economy should be capable of producing—nearly $900 billion, a 6% shortfall.Unquestionably, there is good news in the report. The acceleration itself is encouraging. So too are some of the sources of that acceleration. Consumers continue to pull their weight, and an 8.5% rate of growth of durable goods consumption in the third quarter suggests that the appetite for big purchases is holding up. Residential investment boomed, rising at a 14.4% annual pace for the quarter. Despite that the sector managed just a 0.33 percentage-point contribution to total growth. The relatively low contribution reflects just how far residential output tumbled during the recession and recovery. Construction should chip in ever more in coming quarters, however, as inventory levels have been …

via Economic Crisis


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