Tuesday, October 26, 2010
A game-changing GDP number
Posted by David Smith at 06:30 PM
Category: Thoughts and responses

I'm on holiday so not many updates this week but the third quarter gross domestic product figures were too good to resist.

When everybody was readying themselves for slowdown and double-dip stories, the 0.8% rise in GDP in the third quarter was a welcome reminder of the economy's resilience in the face of what is already a significant fiscal tightening this year.

It would be extraordinary if, after this number - accurately predicted by Royal Bank of Scotland but not most economists - the Bank of England even contemplated further quantitative easing at its November meeting.

Though the numbers were boosted by exceptionally strong construction output, up 4%, there was across-the board strength in the economy. It was the best two-quarter performance since 2000. According to the Office for National Statistics, growth in the second and third quarters was similar once first-quarter weather effects are stripped out.

The Q3 figure gives the economy some decent momentum heading into the winter. It also helps the 2011 arithmetic. As for 2010, even before the big data revisions, growth will be not far short of 2%, More here.