Boom Doom Economy: USA 2010 Annual GDP Revised Upwards to +2.9% (GDP Charts) *2009 GDP was -2.6%*

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Bureau of Economic Analysis: USA Annual GDP Estimate

USA 2010 Annual GDP Final Estimate +2.9%

Official Statement by the Bureau of Economic Analysis is at bottom of this post.

USA Annual 2010 GDP Final Estimate The Bureau of Economic Analysis released the Final Estimate of 2010 Annual GDP which was +2.9%, for a total GDP of $14.66 trillion. The prior second estimate of the Annual 2010 GDP was a +2.8% increase over the 2009 Annual GDP of -2.6%. So the final estimate was an upwards revision of +0.1%. The 2010 Annual GDP of +2.9% is the highest since 2005 (+3.1%). The USA GDP had decreased for 5 consecutive years (2005 through 2009) before this increase in 2010 (YoY %).

GDP +3.0% Benchmark A +3.0% annualized GDP growth rate is generally accepted as the minimum necessary to generate some jobs growth. Therefore, the USA economy did not grow at a sufficient rate in 2010 to create adequate jobs and bring down the true, not official, unemployment and underemployment rates. The Big Question: where is the USA economy headed? Three scenarios are usually discussed: 1) a double dip recession whereby the GDP will turn negative, 2) the economy will continue "bottom bouncing" with very slow growth and a continuing high unemployment rate (i.e., less than or near +3.0% growth), or 3) the bottom is in and GDP growth will accelerate to above +3.0% and continue above, jobs will be created, and the unemployment will continue to decrease. Scenario 2) with USA slow economic growth appears to be the consensus for 2011.

USA Real GDP % by Year (Chart) The chart below is the annual percentage change of the Real GDP (seasonally adjusted at annual rate) from the preceding year (YoY), the most common annual GDP measure. As can be seen, there was a dip in 2001 to +1.1%. The USA economy then recovered to a peak of +3.6% in 2004. Five consecutive annual declines ensued culminating in the Great Recession and a cyclical bottom in 2009 at -2.6%. 2008 was 0.0% and shows as a blank on the chart. The chart covers the last 16 years of the USA GDP as reported by the Bureau of Economic Analysis from 1995 through 2010 (third estimate).

USA Real GDP $ by Year (Chart) The chart below is the Real GDP (seasonally adjusted at annual rate) in total current dollars. As can be seen, the USA economy peaked in 2008, dipped in 2009, and then recovered to another peak in 2010. The chart covers the last 16 years of the USA GDP as reported by the Bureau of Economic Analysis from 1995 through 2010 (third estimate).

The Bureau of Economic Analysis Commentary on the 2010 Annual GDP (third estimate)

Real Real GDP increased 2.9 percent in 2010 (that is, from the 2009 annual level to the 2010 annual level), in contrast to a decrease of 2.6 percent in 2009.

The increase in real GDP in 2010 primarily reflected positive contributions from private inventory investment, exports, personal consumption expenditures (PCE), nonresidential fixed investment, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The upturn in real GDP primarily reflected upturns in exports, in nonresidential fixed investment, in PCE, and in private inventory investment and a smaller decrease in residential fixed investment that were partly offset by an upturn in imports.

The price index for gross domestic purchases increased 1.3 percent in 2010, in contrast to a decrease of 0.2 percent in 2009.

Current-dollar GDP increased 3.8 percent, or $541.4 billion, in 2010. In contrast, current-dollar GDP decreased 1.7 percent, or $250.1 billion, in 2009.

During 2010 (that is, measured from the fourth quarter of 2009 to the fourth quarter of 2010), real GDP increased 2.8 percent. Real GDP increased 0.2 percent during 2009. The price index for gross domestic purchases increased 1.2 percent during 2010, compared with an increase of 0.5 percent during 2009.

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