The economy grew faster in the third quarter than initially estimated, the Bureau of Economic Analysis reported today. Higher is better, although yesterday’s anxieties about the economic outlook continue to plague.
Arguably, those anxieties should have marginally lessened on the news that GDP rose by 2.2% during July through September, higher than the 1.6% initially estimated. The source of the upward revision was a combination of a downward estimate of imports and a hike in calculations of private inventory management and personal consumption expenditures.
That’s all well and good, but it doesn’t change the strategic issue of: what’s up for 2007? Indeed, the economy grew faster in the third quarter, but the 2.2% pace was still slower than the second quarter’s 2.6%, which in turn was much slower than the first quarter’s 5.6%.
The trend, to cut to the chase, remains intact: the economy’s slowing. To reiterate the obvious: how much it slows, for how long, and if it leads to an outright contraction are the great questions. Next year is likely to dispense an answer, and by this time in 2007 (if not sooner) we’ll all have something meatier to chew on in terms of a definitive answer. Getting from here to there, of course, is the challenge and the peril.
That issue, in fact, was front and center this morning at a press conference in New York, hosted by Deutsche Bank’s private wealth management division. Your editor was in attendance, and among the comments that caught our attention was the intention in the near term for “taking risk out of portfolios rather than putting it in.”