US GDP Grew 5% for Q3

The Bureau of Economic Analysis released third quarter GDP figures late last month indicating that the US economy grew at a torrid pace of 5% (annualized). This is a remarkable growth rate that would indicate the strongest GDP growth in a decade.

It is often difficult to properly interpret economic figures published by the government since not only are they complex and based on many variables, but also due to political pressures often exerted on governmental agencies to gin figures.

This Blog is concerned about the reliability of the current figures given the inaction of the Federal Reserve. Specifically, if the GDP actually grew at a 5% annualized rate during the third quarter, it is reasonable to have expected the Fed should to have started raising interest rates in order to forestall an overheating of the economy. The fact the Fed continues to leave rates at historically low amounts indicates that it is either not doing its job properly or it does not believe the GDP growth figures to be reliable.

Tony Sagami wrote an article titled Connecting the Dots for mauldineconomics.com that raises specific concerns relating to Q3’s published GDP growth figures that includes: Continue reading

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