As the presidential election continues to draw nearer, we keep hearing about our collapsing economy from the usual media hysterics. The housing market is near collapse! The credit crunch! The subprime markets are melting, melting, I say!
Well, what about the actual economy?
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 4.9 percent in the third quarter of 2007, according to preliminary estimates released by the Bureau of Economic Analysis.
In the second quarter, real GDP increased 3.8 percent. The GDP estimates released today are based on more complete source data than were available for the advance estimates issued last month. In the advance estimates, the increase in real GDP was 3.9 percent ...
The increase in real GDP in the third quarter primarily reflected positive contributions from
exports, personal consumption expenditures (PCE), private inventory investment, equipment and
software, federal government spending, nonresidential structures, and state and local government spending that were partly offset by a negative contribution from residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
It appears that we're growing our way into a panic on the economy. It may be the first recession in history initiated by a 5% annual GDP growth rate. It won't be the first attempted by scare tactics in the run-up to an election.
Not only has growth continued, it increased in Q3 in multiple areas. PCEs rallied to a 2.7% increase, almost double from Q2. Export growth almost tripled from Q2, from 7% to nearly 19%, thanks to the weak dollar. Private inventories grew almost 1%, up from 0.22% in Q2. Real sales increases ticked up slightly, from 3.6% in Q2 to 3.9% in Q3. Gross domestic purchases increased 3.4%, compared to 2.4% in Q2.
In fact, the last two quarters show strong growth, after the soft Q1 number of 0.6%. There may well be weak points in the American economy, but it hardly looks like a moment for panic. The growth seen over the last two quarters gives every indication that the Bush-era expansion continues apace, and that our economy remains resilient and strong.