Q3 GDP: A Modest and Unsustainable Spurt

Comment on Q3 GDP by Kathy Bostjancic, Director for Macroeconomic Analysis, The Conference Board

Oct 29, 2010, 09:24 ET from The Conference Board

NEW YORK, Oct. 29 /PRNewswire/ -- The U.S. Bureau of Economic Analysis today reported 2.0 percent growth in real gross domestic product for the third quarter of 2010. Growth came in as expected but is actually weaker when you take into account the large unintended build in inventories. Heavy discounting boosted consumer buying but production gains outpaced consumption and investment, so inventories have increased. Reducing those inventories in Q4 will require still more discounting plus some scaling back in production. We forecast growth that recedes back below 2 percent in Q4 and remains slow into the first half of 2011.

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