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Johnson: One of the Worst GDP Reports in Some Time

The headline growth number may have looked strong, but GDP was mostly driven by special factors while core components looked weak.

Bob Johnson: This morning’s third-quarter GDP report showed a surprising strong growth rate of 2.9% in the third quarter, versus 2.5% in terms on the consensus and our forecast of 2.4%. So clearly, on a headline basis, a very strong number, and certainly better than the 0.8% and 1.4% we had in the first two quarters of the year. Seemingly some nicely improving numbers.

Despite that, we feel it is one of the worst GDP reports that we’ve seen in some time. The quality of the report was exceptionally low with a lot of the growth coming out of special factors. Exports in the quarter were up about 10% led by a giant move in soybean shipments. And so that had a big impact on the numbers, and exports contributed an amazing 1.2% to the GDP number. Without that number, and most of that was soybeans, the GDP number would have looked much more disappointing.