The Bureau of Economic Analysis is reporting that economic growth for the last quarter was good at 3.4% growth.
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 3.4 percent in the second quarter of 2007, according to advance estimates released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.6 percent.
Of course, keep in mind these are advanced estimates and they can, and have been, revised downwards. For example, in reading a bit further into the release we find this,
The acceleration in real GDP growth in the second quarter primarily reflected a downturn in imports, upturns in federal government spending and in private inventory investment, accelerations in exports and in nonresidential structures, and a smaller decrease in residential fixed investment that were partly offset by a notable deceleration in PCE.
The import part is important to note since imports would actually be a negative in calculating GDP. That is a decline in imports means that net exports increases which would mean an increase in overall GDP. And is it good that one reason why growth is higher is due to higher government spending? Both of these don’t strike me as all that good. Increases in exports is good, but the decline in the growth personal consumption expenditures (PCE) isn’t all that good a news either.
Bottom line as I see it is that this is mildly good news. Not great, and not bad, but there are still reasons to be cautious about the future of the economy. For one thing, oil prices are quite high and there is some reason to think they wont be coming down substantially anytime in the future. And the housing market still appears to be in the doldrums.
