Third Quarter Economic Growth: 1.6%
And yet more evidence that the economy is slowing (not that I expect this to make much difference to the Troo Believers out there). For the third quarter of 2006, the Bureau of Economic Analysis’ advance estimate of GDP growth is 1.6%.
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 1.6 percent in the third quarter of 2006, according to advance estimates released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.6 percent.
Now this is just the advanced estimate which means that the data it is based on is incomplete and real GDP growth is subject to revision. So while it is possible that growth was higher, the best guess right now is that growth is slowing.
Why is growth slowing?
The deceleration in real GDP growth in the third quarter primarily reflected an acceleration in imports, a downturn in private inventory investment, a larger decrease in residential fixed investment, and decelerations in PCE for services and in state and local government spending that were partly offset by upturns in PCE for durable goods, in equipment and software, and in federal government spending.
The deceleration in non-durable personal consumption expenditures (PCE) and residential fixed investment is somewhat problematic. Also, while this does point to a slowing economy it doesn’t mean that a recession is imminent and that there could be a “soft landing” (see also this). However, lets also keep in mind that the latest drop in housing prices was very large and that does not bode well for the economy.