Perhaps – the 2Q 2013 US growth estimate was revised sharply upwards today, to an annual rate of 2.5%. That would be welcome, and wonderful, if real and sustainable.
Can it be? Again, only perhaps. The biggest factor responsible for the upward revision was a surge in exports and decline in imports. Much of this is a product of the fracking revolution, which will help US balance of payments. There was also a rise in inventories — great if they are sold. But consumer spending is still estimated to have grown at less than 2% per year, and the rise in business investment was offset by greater than expected declines in government spending. Quarterly gains are wonderful; but we had quarterly growth in excess of 2% in Q3 of 2012 too — and that was followed by growth of 0.1% and 1.1% in the next quarter. Since imports and exports are highly volatile, there is no assurance that growth will continue. We shall have to wait and see. Readers know that I am far too skeptical and pessimistic about long-term growth to take one good quarter as evidence that we have leapt forward and returned to an era of steady 2%+ annual growth.
But let us be hopeful. After all, with war looming in Syria, we need to hope the US economy is strengthening, as if we do get dragged into another war in the Middle East, we will need all the economic muscle we can muster.