FINALLY!! Some Good News

The preliminary GDP numbers for the third quarter are now available, and they show that real GDP has increased at a 3.5% annual rate. Following as this does four quarters of decline, I think we should be in something of a celebratory mood.

The increases were pretty much across the board: "...positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, federal government spending, and residential fixed investment..." Nearly half of the growth in GDP comes from motor vehicles (1.66 percentage points of the 3.5). (This is a potential issue, given that much of this may be a consequence of the "Cash for Clunkers" program, and that program has ended.) Durable goods consumption (motor vehicles are part of that) rose at an annual rate of 22.3% in the third quarter, after falling at an annual rate of 5.6% in the second quarter--a huge turnaround.

A piece of data that suggests caution--nonresidential fixed investment fell at an annual rate of 2.5% in the third quarter, still better than the -9.6% rate of change in the second quarter.

But, overall, this report is really good news. Let's hope the revisions don't change our view, and that the next report continues to be strong.