Saturday, March 3, 2012

USA Fourth Quarter GDP Estimated at +3.0%, a 6-Quarter High

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USA GDP Q4 2011 The Bureau of Economic Analysis released the second estimate of Q4 2011 GDP which was +3.00% QoQ, a 6-quarter high, the highest since Q2 2010 (+3.8%). The total GDP was $15.32 trillion (annualized) and an all-time high. The GDP has increased QoQ for 10 consecutive quarters, since Q3 2009, although growth rates have ranged from a near-abysmal +0.4% in Q1 2011 to an encouraging +3.9% in Q1 2010. There will be a third and final estimate announced in March. A recession in 2012 does not appear probable, but continues as a low risk.

Where is the USA Economy Going? 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 yet again with a higher unemployment rate, 2) the economy will continue "bottom bouncing" with slow to very slow growth and a continuing relatively high unemployment rate, or 3) the bottom is in and GDP growth will accelerate and the unemployment rate will begin to decrease. Scenario 2) with slow to very slow economic growth and a continuing relatively high unemployment rate appears to be the most likely scenario for 2012, with an annual GDP growth projected of approximately +2.0% or less. The average of the 4 quarters reported by the Bureau of Economic Analysis in 2011 is +1.63% (Q1 +0.4%, Q2 +1.3%, Q3 +1.8%, Q4 +3.0%).

USA Real GDP % by Quarter (seasonally adjusted at annual rate) A negative drop into the Great Recession began Q3 2008, followed by a plunge in Q4 2008. The Great Recession continued for 4 quarters until Q2 2009. Positive GDP growth resumed in Q3 2009, the rebound peaking in Q1 2010 at +3.9%, and has continued for 10 consecutive quarters.

USA Real GDP $ by Quarter (seasonally adjusted at annual rate) The USA GDP pre-recession peak was Q2 2008 and the Great Recession low was Q2 2009. USA GDP has now increased 10 consecutive quarters. The Q4 2011 GDP (annualized) exceeds both Q2 2008 ($14.416 trillion) pre-recession peak and the prior Q3 2011 peak ($15.176 trillion) to reach an all-time high of $15.32 trillion.

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