Q3 real GDP growth was up 3.5 percent, according to the U.S. government Bureau of Economic Analysis. “With this second estimate for the third quarter, the general picture of economic growth remains the same; upward revisions to nonresidential fixed investment and private inventory investment were offset by downward revisions to personal consumption expenditures (PCE) and state and local government spending,” said the BEA.
Consumer spending is up 3.6 percent, and there is virtually no inflation. Prices are rising 1.7 percent annually per the GDP price deflator that measures the prices of all final goods and services produced domestically.
Soaring corporate profits weren’t a big help to growth, however, as most of the profits are being spent on stock buybacks, though there was a slight increase of capital expenditures. Investment in equipment climbed 3.5 percent vs. virtually no increase in the preliminary estimate.
And spending on structures such as office buildings and drilling rigs fell 1.7 percent instead of -8 percent in the first estimate. Profits were up 19.4 percent after taxes, and tax payments fell 32.9 percent from last year. Corporates profits are therefore up 10.3 percent in a year, the best showing since 2012.
We also now have the Fourth National Climate Assessment, which is much more accurate than the previous reports from 13 federal agencies in pinning down the damage to economic growth. If nothing is done to mitigate its effects on coastal cities’ flooding from rising sea levels, increasing wildfires in drought-stricken regions, and the increasing frequency and ferocity of hurricanes and tornadoes, economic growth will suffer substantially.
“In the absence of significant global mitigation action and regional adaptation efforts, rising temperatures, sea level rise, and changes in extreme events are expected to increasingly disrupt and damage critical infrastructure and property, labor productivity, and the vitality of our communities.”
Need we say more about ignoring physical reality in all its forms? Profits must be invested where they will do the most good. If corporations won’t heed the looming threats to not only the environment but livelihoods as well, then government will find a more beneficial use for the $trillions being hoarded in the private sector.
Harlan Green © 2018
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