Did the Last Quarter Finally Bring Growth Back?

A blog about business and economics.
Dec. 20 2013 2:28 PM

Did the Last Quarter Finally Bring Growth Back?

The Bureau of Economic Analysis released its latest revision to third quarter gross domestic product numbers and the news is ... really good. It says that the economy's nominal output rose 6.2 percent in the third quarter and that 4.8 of those percentage points were real output.

If true, this is three kinds of good news. The first is that nominal output growth of above 5 percent is the kind of "catch-up" demand that the country needs after a prolonged funk. The second kind of good news is that in the context of that kind of rapid nominal growth, the low inflation number (and therefore the high real growth number) is great news that the economy still has lots of running room. Our workers and our capital goods haven't become useless, there simply hasn't been enough demand for their output. The third piece of good news is that while the previous revision to this figure was basically just a big bump in inventories, today's revision was about final demand so it means the growth is sustainable.

The bad news is ... I'm not entirely persuaded this data is correct. Real gross domestic income, which longtime national accounting fans will recall is an alternative way of estimating the same quantity that RGDP is supposed to measure, rose by a fairly anemic 1.8 percent.


Given enough time, GDP and GDI estimates usually converge ,which is good because GDP=GDI by definition. And in recent years the convergence has usually taken the form of meeting closer to the GDI number than to the GDP number. So this could all be a kind of statistical mirage. I'd say Barack Obama's sagging poll numbers are also an indication that the more pessimistic GDI estimate may be the more accurate one. The conventional wisdom says it's all about the healthcare.gov mishaps, but we all remember from Bill Clinton's second term that robust economic growth leads to a lot of forgiveness. I tend to think that if the economy were really accelerating, we'd see indication of that in a brighter public mood.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.


The Juice

Ford’s Big Gamble

It’s completely transforming America’s best-selling vehicle.

Should the United States Grant Asylum to Victims of Domestic Violence?

The Apple Watch Will Make Everyone Around You Just a Little Worse Off

This Was the First Object Ever Designed

Don’t Expect Adrian Peterson to Go to Prison

In much of America, beating your kids is perfectly legal. 


How the Apple Watch Will Annoy Us

A glowing screen attached to someone else’s wrist is shinier than all but the blingiest jewels.


A Little Bit Softer Now, a Little Bit Softer Now …

The sad, gradual decline of the fade-out in popular music.

Is Everyone Going to Declare Independence if Scotland Does It? 

I Tried to Write an Honest Profile of One of Bollywood’s Biggest Stars. It Didn’t Go Well.

Trending News Channel
Sept. 12 2014 11:26 AM Identical Twins Aren’t Really Identical
  News & Politics
Sept. 14 2014 2:37 PM When Abuse Is Not Abuse Don’t expect Adrian Peterson to go to prison. In much of America, beating your kids is perfectly legal. 
Sept. 12 2014 5:54 PM Olive Garden Has Been Committing a Culinary Crime Against Humanity
Inside Higher Ed
Sept. 13 2014 8:38 AM “You’re More Than Just a Number” Goucher College goes transcript-free in admissions.
  Double X
The XX Factor
Sept. 12 2014 4:05 PM Life as an NFL Wife: “He's the Star. Keep Him Happy.”
  Slate Plus
Behind the Scenes
Sept. 12 2014 5:55 PM “Do You Know What Porn Is?” Conversations with Dahlia Lithwick’s 11-year-old son.
Sept. 14 2014 11:44 PM A Little Bit Softer Now, a Little Bit Softer Now … The sad, gradual decline of the fade-out in popular music.
Future Tense
Sept. 12 2014 3:53 PM We Need to Pass Legislation on Artificial Intelligence Early and Often
  Health & Science
New Scientist
Sept. 14 2014 8:38 AM Scientific Misconduct Should Be a Crime It’s as bad as fraud or theft, only potentially more dangerous.
Sports Nut
Sept. 12 2014 4:36 PM “There’s No Tolerance for That” Pete Carroll and Jim Harbaugh say they don’t abide domestic abuse. So why do the Seahawks and 49ers have a combined six players accused of violence against women?