Don't Bust a Nut Over GDP Yet

Friday, January 29, 2010 , , 0 Comments




Forbes:

The U.S. economy crushed expectations by growing at a 5.7% clip in the fourth quarter of 2009, but even as Wall Street rallied on the news there are plenty of warning signs of a slower pace ahead.

A restocking of inventories by American businesses drove a large portion of the fourth-quarter increase, contributing 3.4% compared with just 0.7% in the third quarter when growth was a far calmer 2.2%. Excluding the inventory factor, real final sales of domestic product were up just 2.2% in the October-December period, after rising 1.5% from July to September.

The big impact of inventories is something of a red flag, particularly since the consumer input to GDP was weaker in the fourth quarter than in the prior period, and Dan Egan, president of the Massachusetts Credit Union League, expects the Feb. 26 updated look from the Commerce Department to rein in the estimate.

"[The 5.7% figure] was a surprise," Egan said. "It's an encouraging recovery sign, but there's a difference between Wall Street encouraging and Main Street encouraging." While the data supports arguments that a recovery is building momentum, high unemployment, little job security and limited access to credit are making that story a tough sell to many Americans.


Forbes says "don't rejoice" but I say "stop creaming your jeans, economists" - either way, the point is not to get excited about any of these numbers. How can you even believe any of it? Government stimulus and excessive Fed intervention have distorted the true economic picture beyond recognition. Trying to gauge true economic well-being in this country is like trying to cross-stitch on LSD. Good luck with that.

Before you go prematurely ejaculating all over yourselves, economists, I have three words: shadow government stats.

You're welcome. Now wipe that up.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.

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