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By Jason Stipp | 11-10-2010 01:56 PM

Upside for GDP

Recent trade deficit and inventory data suggest that the government's next revision for third-quarter GDP will be higher.

Jason Stipp: I'm Jason Stipp for Morningstar. The government's first pass at the third-quarter GDP came in at a respectable 2%, but some recent indicators show that their [first] revision to GDP for the third quarter could have some upside.

Here with me to talk about what some of those indicators are, and why they are important on the face of themselves is Morningstar's Bob Johnson. He's director of economic analysis.

Thanks for joining me, Bob.

Bob Johnson: Great to be here.

Stipp: So the 2% was actually better for the first third-quarter GDP number than a lot of people had hoped, but you've seen some recent things that show when they take another look at that number, which they will do, there might be a little bit of upside there. What are some of the things that you've been seeing on the positive side of that ledger?

Johnson: There's been a number of positive developments, and most of them came out this week frankly. The number one was the export number that came out, the balance of trade number that came out. The government had estimated in their GDP report that for the last month of the quarter, which they have to use an estimate for, that we'd see a degradation in the trade balance, it'll get worse. Actually the trade balance for September, now that we've seen it, got better, and so that will add as much as four or five-tenths of a percent to the GDP estimate that they had out there before--something in the 2.4% to 2.5% range just based on that number.

Stipp: So looking at the imports versus the exports: The import number had improvement that was maybe better than was expected in the most recent report right?

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