Gross domestic productgrew 3.5% in the third quarter.
That's great news and all. Only a few months ago, GDP was
falling at a 6%-plus clip, and we were certain the economy
was about to meet a fiery death.
String together another quarter or two of growth, and the
powers in charge will declare the recession over. That really
means nothing, but it'll produce great headlines that make
people feel good again. That's how these things work.
But what's important is
whyGDP is growing:
Component
Third-Quarter Growth
Personal spending
3.4%
Nonresidential fixed investment
(2.5%)
Real exports
14.7%
Government spending
7.9%
Source: Bureau of Economic
Analysis.
Export growth was on fire, thanks in part to a weaker
dollar. But exports are a relatively small portion of our
economy, so even though growth is big, the final contribution
isn't. In fact, net exports (exports minus imports)
decreasedthe final GDP figures.
Our economy is really reliant on consumer spending. That's
why
Wal-Mart (NYSE: WMT) and
Target (NYSE: TGT) dominate the landscape
while manufacturing withers. You can see that by breaking out
the contributions that made up the 3.5% gain:
Component
Contribution to 3.5% Growth
Personal spending
2.36%
Gross private investment*
1.22%
Net exports Continued... |