The Bureau of Economic Analysis announced today that seasonally adjusted U.S. real GDP grew at a 4.9% annual rate in the third quarter. That’s well above the U.S. historical average growth rate of 3.1%.
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“Consumer spending is up, saving is down. What does this mean for the economy?”
That’s the title of today’s segment on WPR’s Central Time, where I was the Dean Knetter’s guest. In my view, the reason why the economy has proved so durable thus far is in large part attributable to the resilience of the consumer, buoyed by Covid era transfer payments. With the path of disposable income higher than thought just a month ago, consumption has been higher, and — with the saving rate lower in the context of a tight labor market — the cushion of “excess savings” larger.
Does the Confidence Index Say We’re in a Recession?
Title of last Conference Board post on the index reads: “Expectations Index Declined for the Second Straight Month, Sinking Back Below Recession Threshold”. Here’s a picture of this index, compared against the University of Michigan Consumer Sentiment index.
Guest Contribution: “China’s Great Leap Backward”
Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared at Project Syndicate. The author thanks Sohaib Nasim for research assistance.
More on China Q3 GDP
BOFIT calculations (based on Kerola (2019)) indicate a slower pace of growth than officially reported. Year-on-Year, the simple average of alternative calculations is less than 4%, compared to the 4.9% officially reported (which is at the top of the range of growth rates from the alternative calculations).
Guest Contribution: “Exchange Rate Elasticities and Product Sophistication”
Today, we’re fortunate to have Willem Thorbecke, Senior Fellow at Japan’s Research Institute of Economy, Trade and Industry (RIETI) as a guest contributor. The views expressed represent those of the author himself, and do not necessarily represent those of RIETI, or any other institutions the author is affiliated with.
China GDP Growth in Q3
Q/Q was 1.3% vs. consensus 1%.
Mean and Median Cumulative Wage Growth
Inflation has not kept with wage growth over the last year.
The GDP Outlook: Now and Near Future
The October WSJ forecast survey is out. The mean forecast is for no downturn (no 2-quarter negative growth). It’s also a lot higher than three months ago.
Inflation: Known Unknowns
In my MJS article on inflation, I wrote: