Two reports related to the state of the United States economy were released in late November. The latest revision for gross domestic product, the broad measure of goods and services produced in the country, leaned positive. But the so-called Federal Reserve Beige Book offered a rather bleak assessment on the economy.

Real GDP growth for the third quarter 2023 was revised up from 4.9 percent to 5.2 percent, which of course is welcome. But the underlying data included some sobering points.

The initial estimate included a decline in real business (fixed nonresidential) investment to – 0.1 percent. The second estimate shifted business investment growth into positive territory at 1.3 percent. That’s certainly an appreciated upgrade, but growth remained sluggish.

A substantial portion of the original 4.9 percent third quarter growth rate was attributed to changes in private inventories, a transitional measure that turns out to be a wash over the long run. That actually increased in the second estimate, accounting for 1.82 percentage points of the 5.2 percent growth rate. That compared to a first estimate of 1.47 percentage points of the 4.9 percent rate.

Third, and finally, government investment and consumption expanded at a faster rate than first estimated — from 4.6 percent and contributing 0.8 percentage points to the real GDP growth rate to 5.5 percent and contributing 0.94 percentage points to the 5.2 percent growth rate. Of course, substantive growth comes from the private sector.

Meanwhile, the latest edition of the Federal Reserve Beige Book
— a summary of views on economic activity based on comments received from contacts outside the Federal Reserve System — painted a bleak picture of the economy based on information gathered on and before Nov. 17.

The key point: “On balance, economic activity slowed since the previous report with four districts reporting modest growth, two indicating conditions were flat to slightly down and six noting slight declines in activity.”

That’s eight of 12 Federal Reserve districts indicating stagnation or decline.

In addition, the Beige Book noted retail sales were mixed and labor demand continued to ease. Manufacturing also ranked as mixed, with the outlook of manufacturers weakening. Looking ahead, the Beige Book noted: “The economic outlook for the next six to 12 months diminished over the reporting period.”

There was nothing positive other than price increases continuing to moderate.

This latest Beige Book indicates the solid top line growth rate in the third quarter was an exception in the ongoing trend of an under-performing economy. The need to implement a pro-growth policy agenda is clear — a mix of tax and regulatory relief, free trade, restrained government spending, a welcoming immigration agenda and sound monetary policy focused exclusively on price stability.

Unfortunately, much of the prevailing policy agenda is pointed in the opposite direction.