This news originally appeared on WealthManagerWeb on 10/29/09
Estimated real GDP jumped 3.5% for the third quarter, according to an “advance estimate” from the Commerce Department’s Bureau of Economic Analysis (BEA). Real GDP is “ the output of goods and services produced by labor and property located in the United States.” That’s a stark contrast to the second quarter’s decrease in real GDP, which was down 0.7%.
Since this estimate is based on “incomplete” data, these numbers may be revised by the time the BEA releases a “second estimate” on Nov. 24. BEA noted that the jump is due in part to the popular “Cash for Clunkers” program, which encouraged drivers of older, gas-guzzling cars to trade in their “clunkers” for new, better-mileage cars by providing cash incentives to do so. Those were matched by or paired with carmaker incentives to buyers and contributed “1.66 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change.”
The real GDP estimate reflects “positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, federal government, spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased,” BEA said in its announcement. “Real personal consumption expenditures increased 3.4 percent in the third quarter, in contrast to a decrease of 0.9 percent in the second. Durable goods increased 22.3 percent, in contrast to a decrease of 5.6 percent.”