Friday, January 29, 2010
Greater GDP growth than predicted
This is good news since we rose more than what was predicted by at least 1.1 percent. The article mentions everything that Goran mentioned today in class, so other than the GDP growth, this article offers nothing new.
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It is certainly good to learn that the GDP growth for this quarter managed to reach a 6-year high of 5.7 percent. However, many economists has explicitly stated that the growth is not sustainable because it relies heavily from businesses replenishing their inventories and exports. If gains from inventories and exports are taken out, the economy last quarter grew at just a 1.7 percent pace. Therefore, I think that for an economy in which over two-third of GDP is consumption, GDP growth fueled solely by any sources other than consumers' spending cannot be sustainable.
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