Dollars and Jens
Friday, July 31, 2009
Investment slowed down less quickly in the second quarter, and the headline GDP result was only a 1% annualized drop, but a lot of the good news here is a bit questionable. More than a point is added by government spending; net exports added more than another point, as imports dropped more rapidly than exports.
I 07II 07III 07IV 07I 08II 08III 08IV 08I 09II 09
Gross domestic product1.
Nondurable goods.48-.13.33.27-.49.35-.94-.78.29-.40
Durable goods.
Change in private inventories-.61.32.19-.63-.21-1.25.26-.64-2.36-.83
Fixed investment-.43.59-.04-.66-.99-.41-1.30-3.28-6.62-1.82
Net exports of goods and services-.29.661.362.24.362.35-.10.452.641.38
Government spending.

I guess in other contexts I've criticized the line of reasoning implicit in my last point, so let me unwrap something here: the fact that there was a big drop in imports, conditional on the other numbers reported here, means that more of the ongoing fall in spending by Americans fell on our trade partners and less of it fell on American producers. So I suppose as an isolated data point it suggests weak demand, but conditional on the rest of it it really does mitigate how weak American production is.

A few last points:

Update: I love Keith Hennessey's graphical representations of GDP. Simple but clear.


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