US Gross Domestic Product for Q3 2016 - First Estimate

The annualized GDP growth rate in the first estimate of the third quarter of 2016 was 2.91 percent which was the best result since the Q3 of 2014. Economy.com had this to say: “Prospects remain bright. Consumers are doing their part and spending growth will remain strong as labor markets tighten and wage increases accelerate. Inflation is low, housing values are near record highs, construction should increase, and household and corporate debt loads are about as light as they have ever been. Risks remain significant, but the economy should be able to overcome them. Another recession is coming, to be sure. It will emanate from a part of the economy’s balance sheet that is opaque and not well understood. Most everyone will miss it. But odds are that the current expansion, already one of the longest, has a ways to run.”

GDP is measured and reported in chained 2009 dollars and in the first estimate of Q3 was $16.702 trillion. The growth calculation is misleading because it takes the quarter over quarter change and multiplies by 4 to get an annualized rate. This makes the high quarters higher and the low quarters lower. Figure 1 clearly shows this effect.