By now most of you have heard that the GDP number yesterday morning came in at an annualized growth of 3.5%, what is interesting is where the nice boost came from. Here is a link to the report itself. People have pointed out that personal consumption expenditures.contributed nicely to growth, 3.05. However, a part that is normally a drag on GDP contributed 1.64 that being net exports of goods and services. Exports increase 10% and imports decline 3.2%. In the time series included in the report, this part hasn't contributed as much to GDP as it has this quarter.

A couple of points, first is that inventories contributed a negative .71 as it looks like business was weary of a slowdown. I wouldn't be surprised if importers were as well. Second, the 10% growth in exports indicate that global growth is strong. Third, the decline in the dollar has had the effect expected( and no it isn't crashing as some would suggest). All this indicates that some of the surprising current account data wasn't a fluke.

The dynamics of this report make a scenario that at least the first part of next year could see some very strong growth led by a rebound in business investment, inventories, an improvement in the housing sector and continued improvment in the trade numbers.


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This page contains a single entry by Bob published on February 2, 2007 11:20 AM.

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