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Final Demand Growth Was 1.3 Percent

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Tuesday, 10 August 2010 04:28

This item might have been worth mentioning in a discussion of the economy's growth prospects and the Fed's response. Growth has been boosted over the last 4 quarters by an inventory cycle as firms went from depleting to building their inventories. This cycle has now ended. Inventory growth is unlikely to accelerate further in the quarters ahead.

This means that GDP growth will be close to final demand growth. Final demand growth has averaged 1.2 percent in the last four quarters and was 1.3 percent in the most recent quarter. There is no obvious reason to expect that the rate will increase in the near future.

Comments (3)Add Comment
...
written by izzatzo, August 10, 2010 6:29
There is no obvious reason to expect that the rate will increase in the near future.


Which is grist for a Republican ad in the upcoming elections: "Even Dean Baker admits the stimulus has not closed the output gap behind unemployment."
...
written by purple, August 10, 2010 4:37
Well, the U.S. consumer is broke. No one should be surprised The wealthy can only buy so many refrigerators per mansion.
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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