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Continuing weak GDI growth is a worrying sign for the US

29 Nov 2012 by Jim Fickett.

Today the Bureau of Economic Analysis reported GDP (second version) and GDI (first release) for Q3. GDI did increase from Q2 to Q3:

However growth of GDI from Q1 to Q2 has been revised down to a negative number, -0.2%, and growth from Q2 to Q3 was only 0.4%. Jeremy Nalewaik has noted that if GDI shows growth of less than 1% quarter-to-quarter, the odds of a recession following within a year are greater than even (On the value and limitations of the "stall speed" concept). So two quarters below 1% is a worrying sign.

Further, the ADS index of current conditions seems to be continuing its trend of lower lows and lower highs:

Still, Nalewaik's stall-speed indicator is almost certainly not activated yet, since GDI year-over-year growth is approximately neutral (+2.3%), and unemployment (US unemployment) and housing starts are in improving trends.

The best summary remains that growth is worryingly slow and rocky, but there is no definitive indication of an incipient recession yet.

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