The Bureau of Economic Analysis (BEA) released the "final" estimates of Q2 real economic growth, revising the growth upward to 3.3% annualized. Meanwhile, labor growth has proven anemic for this part of the economic cycle (the worst in the post-World War II era) and productivity growth has proven much more resilient. I don't know the reason for this odd economic behavior, but note that unemployment isn't that high after all and that productivity growth is what makes us better off in the long run.
Also, the International Monetary Fund (IMF) has published it's September update to its World Economic Outlook. The IMF's forecast of US real growth was revised downward to 4.3% from 4.6% for 2004. This might be a little low, given the BEA upward revisions mentioned above. It's amazing that the labor market isn't sizzling, even though we are expecting 4.3% growth. For 2005, the IMF expects real growth of 3.5%, revised downward from 3.8%.
The IMF forecast for German 2004 real growth is the most encouraging we have seen in several years -- 2%. The IMF expects 1.8% growth for 2005. Can we welcome the German economy back from the land of the living dead? Overall, the European Union is expected to grow 2.6% in 2004 and 2.5% in 2005.
Perhaps the continued disparity between US and EU growth will cause some wringing of hands in Europe, but the difference can be put down almost entirely to continued population growth in the US. In the long run, annual US population growth is about 1 percentage point more than that of the EU, which should translate more or less into a 1 percentage point disparity in economic growth.