Third Quarter GDP Growth Revised

http://www.nytimes.com/2012/11/30/business/economy/third-quarter-gdp-growth-is-revised-up-to-2-7.html?hp

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"The person with a plan, a picture, will go after thoughts that add value to their thinking." (John C. Maxwell)
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After initially saying output increased at an annual rate of 2%, the Commerce Department revised its estimate to show growth at 2.7% in the three months ended September 30.

Consumer spending is up and housing is coming back in several regions. This is good news and I don't want to put a damper on it by pointing out that several prominent economists have predicted 1% or flat GDP growth for the fourth quarter if nothing is done about the "fiscal cliff." Frankly, some have predicted a direct correlation between the fiscal cliff and another U.S. recession. "Dr. Doom" (Nouriel Roubini, economist and rock star) has consistently predicted over several quarters that GDP growth is at "stall speed."

 Warren Buffet was on the "Today" show this week and indicated that he thinks the economy is coming back. He also said his companies will be spending $9 billion in capital on plant and equipment in the coming year or years. That was his answer to the "fiscal cliff" issue.

According to the Federal Reserve's Beige Book Survey released Wednesday, growth improved in 9 of the Fed's 12 regional banking districts. Growth was weaker in New York, Philadelphia and Boston - not unexpected based on the problems Sandy caused. The Fed noted that growth was better despite nervousness about the fiscal cliff.

The Fed's Beige Book covers economic conditions around the U.S. from October thru November 14th and will be used for the Fed's December 11-12 meeting. In the Fed's Dallas region, the economy expanded modestly, with reports on manufacturing and transportation services mixed. Auto sales were flat. Home sales and construction increased and energy production continued to be strong.

Here's a quote from Robert Williams who is a senior fellow at the Tax Policy Center: "If we go over the fiscal cliff, revenues will rise, even though the economy will likely fall back into recession. If President Obama and Congress reach a compromise, taxes will likely rise less. In either case, the government will need more revenue to balance its budget."

In spite of Warren Buffet's confidence, the pent up capital spending in Top 500 companies is still there. Once the fiscal cliff issue is resolved, let's see what happens with pent up capital.