The Bureau of Economic Analysis (BEA) published its first estimate of GDP growth for the September quarter. The 2.0% real growth forecast is not too surprising, as many forecasts have lowered their outlook in recent weeks and the Atlanta Federation GDP forecast is now down to 0.2%.
Grantsonton chief economist Diane Swank said: The delta options have exploded, the number of cases is rising and supply chain bottlenecks are increasing. Private consumption was hardest hit, slowing to 1.6%. That’s less than a quarter of the hefty 12% rate in the second quarter. ”
He added, “Scarcity, rising prices and slower job growth, particularly in the services sector, weighed on spending in the third quarter. Services were hit by a sharp drop in prices for high-value goods such as vehicles, equipment and furniture. This was partially offset by a steady but slow increase in costs.
Segment that contributed 2.0% growth
There are hundreds, if not thousands, of segments that make up the US economy, but they are grouped into four main segments. Below is how much each was added to or subtracted from growth of 2.0% or 203 basis points during the quarter.
Personal consumption: 1.09% or 109 basis points added and two main subsegments added:
Product: 2.32% or 232 basis points deducted
Service: add 3.4% or 340 basis points
Domestic Private Investment: 1.94% or 194 basis points added and two main subsegments added:
Investment: 0.14% or 14 basis points minus
Change in personal inventory: Addition: 2.04% or 204 basis points
Net exports: 1.14% or 114 basis points minus
Government: 0.14% or 14 basis points added
Please note that there are additional subsegments for private consumption and private domestic investment.
Quarterly calculations can be misleading
The BEA essentially calculates the annual growth rate by multiplying the quarterly growth rate by 4. Components of GDP such as private consumption of goods and services, domestic investment, changes in inventories and their impact on trade can vary significantly from quarter to quarter. -You can easily change the quarterly and yearly calculations.
Moreover, the first effects of Covid-19 and increasing bottlenecks in supply chains are causing even greater distortions in the economy and the resulting quantities. This can be seen in the subsequent quarterly and annual GDP data.