Results 1 to 3 of 3

Thread: First Quarter Economic Growth is up, BUT....

  1. #1
    Banned Eric Stoner's Avatar
    Joined
    Oct 2006
    Location
    NYC
    Posts
    5,150
    Thanks
    1,261
    Thanked 1,430 Times in 888 Posts

    Default First Quarter Economic Growth is up, BUT....

    Economic growth increased 2.5% for the First Quarter BUT:

    Economists say that growth for THIS Quarter will be 2 % at best.

    Consumer take home pay is down. Someone earning $50,000 a year has about $1000 less to spend thanks to the restoration of Social Security taxes.Two earner households have seen declines of as much as $4500.

    Hiring slowed sharply in March.

    Government cuts couple with sluggish private sector hiring has slammed the lid on new job creation.

    Last but not least, these are initial Commerce Dept. figures. Under SOP they will be revised twice more.

  2. #2
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: First Quarter Economic Growth is up, BUT....

    ^^^ where do I even start .... well perhaps with this blurb from Reuters -


    (snip)"Gross domestic product expanded at a 2.5 percent annual rate, the Commerce Department said on Friday, after growth nearly stalled in the fourth quarter. Economists had expected a 3.0 percent growth pace.

    "It wasn't the bang-up start to the year we had hoped for, and the signals from March suggested that we will only decelerate from here," said Avery Shenfeld, chief economist at CIBC World Markets in Toronto.

    Growth rebounded in the early part of 2013 but data ranging from employment to retail sales and manufacturing weakened substantially in March. It appears the factory sector slowed further in April and many forecasters expect the economy's softness to persist into the third quarter before a convincing revival emerges, given belt-tightening in Washington.

    A 2 percent payroll tax cut expired at the start of the year and $85 billion in mandatory spending cuts, known as the sequester, started to take hold at the beginning of March.(snip)


    Relevant observations -

    - the GDP figures are seasonally adjusted ... thus 'estimates' which must be viewed with a 'grain of salt' until the raw numbers are published and analyzed

    - a significant component of 1Q consumer spending was purchases / leasing of new vehicles by 'subprime' borrowers now ( again ) able to obtain financing from certain lenders with very low down payments despite relatively poor credit ratings

    - another significant component of 1Q GDP was in increase in US auto manufacturer shipments to dealers. Despite, not actually being sold to consumers, these shipments are booked as 'sales' by the auto manufacturers and thus contribute to the GDP number despite the fact that a large number of these vehicles wind up sitting unsold on dealer lots. The detailed March 13 numbers aren't out yet, but as of the end of February the 743k cars per month shipment to dealers were at the second highest monthly levels ever ... and compare to 667k cars shipped in Feb 12, to 517k cars shipped in Feb 11, to 420k cars shipped in Feb 10, etc.

    - GDP measures total dollar value of spending, thus rising gasoline prices, rising food prices etc. cause the GDP number to increase even though US consumers may in fact be buying the same total gallons of gas or the same total pounds of hamburger, but at higher price levels. Per gaspricewatch.com the average price of gasoline went from 3.28 per gallon during the first week of January to 3.62 per gallon during the last week of March.

    - despite highly touted 'sequester' related spending reductions versus some arbitrary baseline budget, in point of fact most gov't entities are spending more money than ever ... increased spending which is included in GDP. Among gov't spending categories that are increasing rapidly is SNAP / food stamps, which now covers 20% of Americans versus 17% a year ago. Another rapidly increasing gov't expenditure category is Social Security Disability ... see

  3. #3
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: First Quarter Economic Growth is up, BUT....

    also, some additional perspective from


    (snip)"Now that we have the first estimate of Q1 GDP growth in both rate of change and absolute current dollar terms ($16,010 billion), we can finally assign the appropriate debt number, which we know on a daily basis and which was $16,771.4 billion as of March 31, to the growth number. The end result: as of March 31, 2013, the US debt/GDP was 104.8%, up from 103% as of December 31, 2012 or a debt growth rate that would make the most insolvent Eurozone nation blush. There was a time when people were concerned about this unsustainable trajectory, but then there was an infamous excel error, and now nobody cares anymore."(snip)

    The underlying point of course is that ALL of the estimated GDP growth for the first quarter can be explained by accelerated spending of yet more borrowed money ( as opposed to any positive production of real 'value' ).

Similar Threads

  1. Replies: 26
    Last Post: 02-26-2013, 01:40 PM
  2. Replies: 1
    Last Post: 11-05-2011, 05:25 PM
  3. Replies: 0
    Last Post: 06-05-2010, 04:12 AM
  4. Replies: 7
    Last Post: 02-12-2006, 05:57 PM
  5. For economic growth, tougher environmental laws?
    By discretedancer in forum Political Poo
    Replies: 14
    Last Post: 03-19-2005, 04:24 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •