The latest news from BEA can be found here. James Hamilton provides some details on this 3.9% annual growth rate bit of goods news and lowers his recession probability. A few more observations are in order.
Consumer demand growth was only 3 percent – which to a Rubinesque bear like myself is sort of good news if this eventually translates into more investment. Investment demand barely grew however as the growth in business investment barely offset the continuing fall in residual investment. Ah but the Federal Reserve did lower the Federal Funds rate by more than inflation dove Brad DeLong would have.
The two other GDP categories are government purchases and net exports. Government purchases grew by 3.7 percent at annualized rate almost entirely because of defense spending growth. One has to wonder why our neocon President had his temper tantrum yesterday morning. But the truly excellent news was the rise in exports. Let’s hope this continues – even if it means Lou Dobbs would have one less thing to complain about.