Economic growth accelerates during third quarter

12/01/1998


According to preliminary estimates from the Commerce Department's Bureau of Economic Analysis, real gross domestic product (GDP) -- the total output of goods and services produced in the United States -- increased at a seasonally-adjusted annualized rate of 3.3% during the third quarter of this year. This figure was a much stronger rate of growth than most economic forecasters had been looking for, particularly following the subdued 1.8% gain in the nation's GDP during the second quarter of the year.

However, the numbers weren't quite as strong as they appeared on the surface. When an unexpected surge in the amount of new product that was added to business inventories during the quarter is subtracted out, the "final sales" measure of GDP rose by a solid, but more restrained, 2.3%. This amount is more in line with what most consider to be the real underlying strength of the nation's economy, given continued uncertainty about the international economic situation. The current assumption is that this inventory surge won't be duplicated during the next several quarters, and that third-quarter inventory accumulation may in fact "rob" future quarters of gains that could have accrued if companies had been more prudent in their inventory building over the July-September period. If, however, demand proves to be stronger in the months ahead than most are currently anticipating, the third quarter buildup of inventory will be seen as less troublesome.

Looking at the underlying details of the GDP report, it's clear that overall consumer and business demand did cool between the second and third quarters of this year. Total consumer spending, which had grown at a well-above-trend 6.1% annual rate during the first half of this year, increased at a more modest 3.9% in the final quarter (although this rate was still much better than annual growth recorded in 1995-1997). And business fixed investment in new plant and equipment -- widely-acknowledged to be the single most important driving force behind this long period of economic expansion -- actually declined at a 1% annualized rate during the third quarter. Exports also continued as a drag on overall GDP growth during the third quarter (just as they had during the year's first two quarters), falling at a 2.9% annualized rate after averaging double-digit annual growth during the past 3 yr.

The third quarter GDP numbers will be revised twice before the government considers them to be final, so some of the specifics will change, and overall GDP growth may turn out to be slightly higher or slightly lower than 3.3%. Whatever, the final third-quarter estimate ultimately looks like, however, it's likely that the fourth-quarter gain will be a notch or two below it --unless businesses surprise us again by investing still more in inventory.

Growth in GDP unexpectedly strong during July-September

(Seasonally-adjusted, annualized growth in GDP)

Q3/96 2.1%

Q4/96 4.2%

Q1/97 4.2%

Q2/97 4.0%

Q3/97 4.2%

Q4/97 3.0%

Q1/98 5.5%

Q2/98 1.8%

Q3/98 3.3%

Source: U.S. Commerce Department





Top Plant
The Top Plant program honors outstanding manufacturing facilities in North America.
Product of the Year
The Product of the Year program recognizes products newly released in the manufacturing industries.
System Integrator of the Year
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
June 2018
2018 Lubrication Guide, Motor and maintenance management, Control system migration
May 2018
Electrical standards, robots and Lean manufacturing, and how an aluminum packaging plant is helping community growth.
April 2018
2017 Product of the Year winners, retrofitting a press, IMTS and Hannover Messe preview, natural refrigerants, testing steam traps
June 2018
Machine learning, produced water benefits, programming cavity pumps
April 2018
ROVs, rigs, and the real time; wellsite valve manifolds; AI on a chip; analytics use for pipelines
February 2018
Focus on power systems, process safety, electrical and power systems, edge computing in the oil & gas industry
Spring 2018
Burners for heat-treating furnaces, CHP, dryers, gas humidification, and more
April 2018
Implementing a DCS, stepper motors, intelligent motion control, remote monitoring of irrigation systems
February 2018
Setting internal automation standards

Annual Salary Survey

After two years of economic concerns, manufacturing leaders once again have homed in on the single biggest issue facing their operations:

It's the workers—or more specifically, the lack of workers.

The 2017 Plant Engineering Salary Survey looks at not just what plant managers make, but what they think. As they look across their plants today, plant managers say they don’t have the operational depth to take on the new technologies and new challenges of global manufacturing.

Read more: 2017 Salary Survey

The Maintenance and Reliability Coach's blog
Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
One Voice for Manufacturing
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Maintenance and Reliability Professionals Blog
The Society for Maintenance and Reliability Professionals an organization devoted...
Machine Safety
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
Research Analyst Blog
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Marshall on Maintenance
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
Lachance on CMMS
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
Electrical Safety Update
This digital report explains how plant engineers need to take greater care when it comes to electrical safety incidents on the plant floor.
Maintenance & Safety
The maintenance journey has been a long, slow trek for most manufacturers and has gone from preventive maintenance to predictive maintenance.
IIoT: Machines, Equipment, & Asset Management
Articles in this digital report highlight technologies that enable Industrial Internet of Things, IIoT-related products and strategies.
Randy Steele
Maintenance Manager; California Oils Corp.
Matthew J. Woo, PE, RCDD, LEED AP BD+C
Associate, Electrical Engineering; Wood Harbinger
Randy Oliver
Control Systems Engineer; Robert Bosch Corp.
Data Centers: Impacts of Climate and Cooling Technology
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
Safety First: Arc Flash 101
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
Critical Power: Hospital Electrical Systems
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me