Final GDP Remains at a (Still Astounding) 4.9%

^{Bill Pugliano /Getty Images}

The BEA reported that the final U.S. GDP growth for Q3 2007 was a (still) astounding 4.9%. This revision was at the same level as the preliminary report, and (still) a full percentage point higher than the advance GDP forecast of 3.9% released two months ago. The revision was due to updated information that showed higher inventory levels and exports, and lower imports, than initially estimated. Imports are subtracted from GDP. (Source: GDP News Release)

Q3 GDP growth of 4.9% is quite an improvement over Q2 GDP of 3.8%. It is even a bigger jump from Q1 GDP growth of only .6%. The last time GDP was that low was in Q1 2003, the tail-end of the last recession. A healthy growth rate is about 2-3%. For a review of the most recent GDP reports, see GDP Current Statistics.

What It Means to You

Q3 GDP benefited from the dollar's decline, which helps exports (by making them relatively cheaper and more competitive) and hurts imports (by making them more expensive). Still, it seems surprising that GDP should jump so dramatically, since housing, which comprises 10% of the economy, continues to decline.

In fact, Federal Reserve Chairman Ben Bernanke mentioned last month that the Fed expects Q4 GDP to be much lower, with the slowing trend continuing through the first part of 2008. (See National and Regional Overview, Charlotte, NC, 11/29/07)

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