Third quarter GDP revised down

David Gura Nov 22, 2011

Kai Ryssdal: So let’s do this, all right? Get away from the politics of the American economy, deficits and super committees and Congress and all that, and seek refuge in the numbers. The pure unadulterated essence of economic measurement. Sound good?

I hope so, because we got some new numbers from the Commerce Department today. Their revised estimate of what happened to gross domestic product — GDP, in the vernacular — in the third quarter. New data from July through September suggests the economy grew at an annual rate of 2 percent. That’s half a percentage point less than they originally guessed. But still, not all bad news.

From Washington, Marketplace’s David Gura reports.

David Gura: When it comes to economic indicators, GDP is the big one. It’s the value of all goods and services we produce.

Nigel Gault is an economist at IHS Global Insights.

Nigel Gault: By the fact that it’s all-inclusive, it is the single most important indicator of activity.

David Ressler with Nomura Securities says you have to take that number apart to see what really happened.

David Ressler: Economists tend to look at GDP in disaggregated form.

They look at what goes into it, like how much consumers and businesses spent in the third quarter. The Commerce Department said spending was up by about 3.5 percent. But companies were worried about demand and had slimmed down their inventories.

Faucher: You know, things on shelves that businesses sell to other firms and customers.

Gus Faucher is with Moody’s Analytics. He says companies were influenced by economic uncertainty, things like the debt ceiling debate and the S&P downgrade.

Nigel Gault says companies erred on the side of caution.

Gault: I think it turned out that their worst fears weren’t realized. Sales probably held up a bit better than they’d anticipated, so they were left with probably fewer goods on the shelf.

And higher demand means they may have to ramp up production. Stuart Hoffman is with P&C Financial Services.

Stuart Hoffman: If they have a half-decent holiday season — and we think they will — they’re actually going to find that they’re going to have to restock those shelves after the holiday, into the first part of next year.

And that could mean more growth in the fourth quarter.

In Washington, I’m David Gura for Marketplace.

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