Wednesday, December 16, 2009

Monthly GDP rose a whopping 1.0% in October

Monthly real GDP, one of the five primary economic indicators that the NBER Business Cycle Dating Committee (NBER BCDC) uses to judge recession start and end dates, rose by a "whopping" +1.0% in October or +12.1% annualized, after a +0.2% gain in September, and real Q4 GDP is forecast to rise by +4.2% annualized, according to Macroeconomic Advisers (MA). The government does not publish GDP data at a monthly level, but the NBER Business Cycle Dating Committee says that they refer to sources such as Macroeconomic Advisers (MA) and their MGDP data series. As Macroeconomic Advisers summarized GDP for October:

Monthly GDP rose a whopping 1.0% in October.  Monthly GDP has been rising since July, following roughly a flat trend over the first half of this year.  Roughly half of the increase in October was accounted for by nonfarm inventories, which declined in October by substantially less than in September.  PCE and net exports also posted solid gains in October.  The level of monthly GDP in October was 5.2% above the third-quarter average at an annual rate.  Our latest tracking forecast of 4.2% GDP growth in the fourth quarter assumes a 0.5% decline of monthly GDP in November followed by resumed growth in December.

Back in September their report effectively "called" the end of the recession as June: "We expect monthly GDP to continue to trend higher, marking June as the last recession month."

The trend since June is still very short as GDP trends go, but we are at least on an up-trending track. Employment still has a ways to go, but it is also headed in the right direction.

If the NBER BCDC is the definitive expert on marking of recessions, MA is the definitive expert on calculating real GDP at the monthly level with their MGDP data series.

-- Jack Krupansky

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