US economic growth could be accelerating—with manufacturing as well as consumers. It was consumers that provided most of the 2.4 percent increase in Gross Domestic Product (GDP) in the ‘advance’ (first of three) estimates of second quarter economic growth, but the manufacturing and construction industries may be taking over in the next phase of this economic recovery.
The Atlanta Federal Reserve’s advance estimate of third quarter economic growth just jumped to 5.8 percent, thought to be an almost unbelievable growth rate just weeks ago. This will confound pundits and economists alike as all those capital infrastructure projects shift into high gear.
GDP growth is soaring because private capital spending has also picked up, proving that governments must kick start many of those projects that don’t promise enough profits to bring in private investment, i.e., long term projects like roads, bridges that pay for future growth. This is the truth that Wall Street doesn’t want to hear, until it meets a worldwide catastrophe like the COVID pandemic.
This has been the case since the Great Depression but never in the scale that has been spurred by the post-pandemic recovery.
“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2023 is 5.8 percent on August 16, up from 5.0 percent on August 15. After this morning's housing starts report from the US Census Bureau and industrial production report from the Federal Reserve Board of Governors, the nowcasts of third-quarter real personal consumption expenditures growth and third-quarter real gross private domestic investment growth increased from 4.4 percent and 8.8 percent, respectively, to 4.8 percent and 11.4 percent,” said the Atlanta Fed.
The jump in housing starts was surprising in the face of higher mortgage rates as bond traders expect that more robust growth will push up longer term interest rates, like the benchmark 10-year Treasury yield now edging above 7 percent.
“With many homeowners choosing to stay in their existing home to preserve their low mortgage rate, demand for new home construction pushed up single-family starts in July even as builders continue to struggle with increased uncertainty stemming from rising rates,” said Alicia Huey, chairman of the National Association of Home Builders (NAHB).”
And manufacturing companies have added 100,000 clean energy jobs in wind and solar energy, EV manufacturing and other clean energy sectors across the country since the Inflation Reduction Act became law,, according to a report by the nonprofit Climate Power.
As of January 31, 2023, there are over 90 new clean energy projects in small towns and bigger cities nationwide totaling $89.5 billion in new investments, said their study.
This is what it means to pay for the future—our future health as well as creating better-paying jobs.
Harlan Green © 2023
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen
No comments:
Post a Comment