Today's GDP numbers have confirmed our previous forecast of a real continued contraction in the economy and second wave in this downturn. First off, any numbers reported by the government should always be taken with heavy skepticism. Let's remember the government applies hedonics and an artificially low inflation rate to this number, so what could look like growth is often time price inflation. We should also note that there is a lot of economic activity from people not paying their mortgages from strategic defaults. Obviously, if you don't have a mortgage payment, you will have a little more spending money to go out to eat, shop, and enjoy the finer things in life.
Low interest rates and government spending also has a lot to do with our current positive GDP. With that said, let's look at the components of the latest official number announced this morning. Three components caught our eyes, 1. Personal expenditures were 21% below expectations, a 2.8% number was forecast and it officially printed at 2.2%. 2. Fixed Investmentsfell from 0.93% to just 0.26% and 3. a build up of inventories which added 1.19% to growth, which was actually revised up from 0.09%. This build up in inventory means that growth was actually less than 1%. If you account for all the fraud in the way they calculate the number, plus the easy money going into the economy from additional fraud, the real economy is already seeing a contraction. As far as the official number, GDP increased at an annual rate of 1.8% in the first quarter of 2011. The last official GDP number from the last quarter of 2010 was 3.1%.
hostgator coupon 2011
No comments:
Post a Comment