The Truth Behind the Q3 GDP Surge
Spencer Brown
5–6 minutes
The United States Economy grew by 4.9 percent in the third quarter according to the advance estimate for real GDP released by the U.S. Bureau of Economic Analysis on Thursday morning, beating the consensus expectation of 4.3 percent.
As the BEA's release on the third quarter estimate explained:
The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, and residential fixed investment that were partly offset by a decrease in nonresidential fixed investment...Imports, which are a subtraction in the calculation of GDP, increased.
The increase in consumer spending reflected increases in both services and goods. Within services, the leading contributors were housing and utilities, health care, financial services and insurance, and food services and accommodations. Within goods, the leading contributors to the increase were other nondurable goods (led by prescription drugs) as well as recreational goods and vehicles. The increase in private inventory investment reflected increases in manufacturing and retail trade. Within nonresidential fixed investment, a decrease in equipment was partly offset by increases in intellectual property products and structures.
Compared to the second quarter, the acceleration in real GDP in the third quarter reflected accelerations in consumer spending, private inventory investment, and federal government spending and upturns in exports and residential fixed investment. These movements were partly offset by a downturn in nonresidential fixed investment and a deceleration in state and local government spending. Imports turned up.
Notably, the Q3 number covering the period from July through September is more than double the 2.1 percent growth recorded in the second quarter — but it's not necessarily a sign of a strong or healthy economy.
As Job Creators network President and CEO Alfredo Ortiz explained, Thursday's "GDP growth figure is a mirage created by unprecedented deficit spending. The Biden administration racked up a $1.7 trillion deficit over the last year, one of the highest in American history, more than even during the Great Recession, and a ridiculous number for an economy running close to full capacity," he explained.
According to the latest GDP report, government spending grew at its fastest rate — 4.6 percent — since the fourth quarter of 2022.
"This reckless spending juiced the economy, but it hasn't made Americans better off, as it has also caused high inflation to persist," Ortiz added. "Polling shows Americans are historically sour on the economy, as their real wages stagnate due to Bidenflation."
Meanwhile, the surge in consumer spending shows that the Federal Reserve's efforts to spike interest rates to make it more difficult for Americans to buy have not yet caused demand to cool or inflationary trends to reverse after being spurred to 40-year highs by Biden's economic policies.
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https://townhall.com/tipsheet/spencerbrown/2023/10/26/q3-gdp-estimate-n2630400
