Economy Slowed in Q3 Slightly More Than Original Estimate
The BEA preliminary report for the U.S. GDP growth rate for Q3 2008 was a negative .5%, down slightly from the advance report estimate of .3% decline. However, it represents a substantial decline from the 2.8% growth in the second quarter. The decrease was due to the first decline in consumer spending since 1991 and the biggest drop since 1980. The slowdown in growth would have been worse without increased government spending. (Source: GDP News Release)
What It Means to You
This is the second quarter of negative GDP growth in a year, thereby confirming for me that we are in a recession. The definition of a recession is when GDP growth is negative for two or more consecutive quarters. However, the 2001 recession was pretty bad, and did not see any consecutive quarters.
Furthermore, most economists are predicting that the next quarter will be negative, so I am just calling the official recession one quarter early. The last negative quarter was Q4 2007, which was down .2%.
Growth for 2007 was 2%, down from the 2006 growth rate of 2.8%. This decline in growth has been due to the housing market slowdown and related weak consumer spending. For a review of the most recent GDP reports, see GDP Current Statistics.
Comments
“The definition of a recession is when GDP growth is negative for two or more consecutive quarters. However, the 2001 recession was pretty bad, and did not see any consecutive quarters.”
-Then was it really a recession?
“Furthermore, most economists are predicting that the next quarter will be negative, so I am just calling the official recession one quarter early.”
-Ever hear of a self-fulfilling prophecy?
Hi Phil,
The NBER is the official designator of recessions, and it declared the 2001 slowdown to be a recession, as it declared this year to be a recession yesterday.
I don’t believe I am powerful enough to cause a recession by declaring it early. If I thought I were that powerful, I would declare it over!
Kimberly
I’m not sure ‘official’ is the right term. They are a private, nonprofit research organization. Sure, their opinion is respected, but there’s nothing ‘official’ about it.
You yourself stated that you aren’t the only economist predicting a negative 4th quarter.