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November 26, 2008

The GDP report

Some call it the nation's economic report card; this is the quarterly report on the output of all the nation's factories, farms and offices, technically known as the gross domestic product, or GDP for short. We just had the preliminary GDP report for the third quarter recently released. What did it tell us?

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Well, it wasn't a good report. It showed that GDP fell for the three months of July, August and September. This means that the economy actually shrunk during those three months. To many people, this isn't a surprise because obviously we've been dealing with a challenging economy for several months. Now by some definitions, a recession only occurs when we have two straight quarters of economic shrinkage. So we've had one in the third quarter, and many economists are expecting that GDP will fall also in the fourth quarter, in fact by a much bigger amount. So, therefore, by that definition, we would certainly see a recession called, or we will have an economy, if you will, that qualifies for a recession. Now other economists take a broader view of a recession and say that we don't really need to have two quarters of economic decline. In fact, we didn't have that in the 2001 recession. They look at factors like job market and consumer spending. But regardless, it looks like we're going to have a recession by any way that you measure it."

Posted by Dave at November 26, 2008 08:00 AM