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ABOUT THAT 5% GDP GROWTH RATE…
Power Line ^
| 12-26-2014
| John Hinderaker
Posted on 12/26/2014 2:41:46 PM PST by smoothsailing
December 26, 2014
by John Hinderaker
About that 5% GDP Growth Rate…
Just before Christmas, the Commerce Department announced that third quarter GDP growth came in at an upwardly-revised 5% annual rate. Nearly everyone hailed this as wonderful economic news. The New York Times celebrated the apparent return to rapid growth:
[H]ere, for the holidays, is the festive news: The economy roared ahead at a 5 percent annual growth rate in the July through September quarter, the fastest quarterly growth since 2003. …
The biggest revision that boosted G.D.P. was in personal consumption spending, the biggest engine of overall economic activity, which rose at a 3.2 percent annual rate, not the 2.2 percent rate earlier estimated.
But what drove that upward revision in personal consumption? The Times suggests that lower gas prices were a factor, and to be sure, falling gas prices are great news for consumers. But Tyler Durden at Zero Hedge takes a closer look at the data, and recalls a prediction he made at the end of the first quarter:
Back in June, when we were looking at the final Q1 GDP print, we discovered something very surprising: after the BEA had first reported that absent for Obamacare, Q1 GDP would have been negative in its first Q1 GDP report, subsequent GDP prints imploded as a result of what is now believed to be the polar vortex. But the real surprise was that the Obamacare boost was, in the final print, revised massively lower to actually reduce GDP!
This is how the unprecedented trimming of Obamacare’s contribution to GDP looked like back then:
Of course, even back then we knew what this means: payback is coming, and all the BEA is looking for is the right quarter in which to insert the “GDP boost”. This is what we said verbatim:
Don’t worry though: this is actually great news! Because the brilliant propaganda minds at the Dept of Commerce figured out something banks also realized with the stub “kitchen sink” quarter in November 2008. Namely, since Q1 is a total loss in GDP terms, let’s just remove Obamacare spending as a contributor to Q1 GDP and just shove it in Q2.
Stated otherwise, some $40 billion in PCE that was supposed to boost Q1 GDP will now be added to Q2-Q4.
And now, we all await as the US department of truth says, with a straight face, that in Q2 the US GDP “grew” by over 5% (no really: you’ll see).
Well, we were wrong: it wasn’t Q2. It was Q3, albeit precisely in the Q2-Q4 interval we expected.
Fast forward to today when as every pundit is happy to report, the final estimate of Q3 GDP indeed rose by 5% (no really, just as we predicted), with a surge in personal consumption being the main driver of US growth in the June-September quarter. As noted before, between the second revision of the Q3 GDP number and its final print, Personal Consumption increased from 2.2% to 3.2% Q/Q, and ended up contributing 2.21% of the final 4.96% GDP amount, up from 1.51%.
So what did Americans supposedly spend so much more on compared to the previous revision released one month ago? Was it cars? Furnishings? Housing and Utilities? Recreational Goods and RVs? Or maybe nondurable goods and financial services?
Any of those would have been good news. But no: the “personal consumption” that drove the supposed economic boom in the third quarter was the increased cost of Obamacare, spending that had been moved from the first quarter to make the third quarter look better:
Actually no. The answer, just as we predicted precisely 6 months ago is…well, just see for yourselves.
In short, two-thirds of the “boost” to final Q3 personal consumption came from, drumroll, the same Obamacare which initially was supposed to boost Q1 GDP until the “polar vortex” crashed the number so badly, the BEA decided to pull it completely and leave this “growth dry powder” for another quarter. That quarter was Q3.
We can only hope that exploding Obamacare costs don’t drive “personal consumption” any higher in future quarters, and also that this sort of statistical manipulation comes to an end when the endlessly corrupt Obama administration finally departs the scene.
TOPICS: Business/Economy; Conspiracy; Government; Politics
KEYWORDS: economy; gdp; obamacare
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To: smoothsailing
I’ve not learned much about economics in my lifetime but in six years I’ve learned we can’t believe a word that comes from 0bama and his administration, this is an excellent example.
2
posted on
12/26/2014 2:57:39 PM PST
by
jazusamo
(0bama to go 'full-Mussolini' after elections: Mark Levin)
To: smoothsailing
If the economy improved 5% wouldn’t there be a corollary in reduced unemployment, an increase in the percentage of workforce participants and and one hell of a pay raise across the board?
No?
Then these numbers aren’t fictitious?
3
posted on
12/26/2014 2:58:22 PM PST
by
Vendome
(Don't take life so seriously-you won't live through it anyway-Enjoy Yourself ala Louis Prima)
To: Vendome
Oh silly you. Using economic logic to present your case.
//Sarcasm
4
posted on
12/26/2014 3:04:50 PM PST
by
Vermont Lt
(Ebola: Death is a lagging indicator.)
To: smoothsailing
Lets see what happens when ObotCare employer and individual mandate get implemented.
5
posted on
12/26/2014 3:07:41 PM PST
by
Red Steel
To: Vermont Lt
My number one service and I provide it free of charge...
6
posted on
12/26/2014 3:13:21 PM PST
by
Vendome
(Don't take life so seriously-you won't live through it anyway-Enjoy Yourself ala Louis Prima)
To: smoothsailing
I’m sure gay “marriage” spending will boost Q4 to 10%
Hey, why not? They are corn holing data and the media loves it all.
7
posted on
12/26/2014 3:33:48 PM PST
by
outofsalt
( If history teaches us anything it's that history rarely teaches us anything.)
To: Vendome
Look I have lived through enough of these to know what a real recovery looks like. In a real recovery you see lower unemployment, of course. You see a raise in real wages. You see more start ups as entreprenuers seek to capitalize on the economic expansion. You see less people on welfare (like food stamps). You see a boom in commercial construction. You see construction cranes. You see shorter skirts. Does anyone see these things? Because I sure as hell don’t.
8
posted on
12/26/2014 3:44:17 PM PST
by
fhayek
To: smoothsailing
9
posted on
12/26/2014 3:53:30 PM PST
by
ForYourChildren
(Christian Education [ RomanRoadsMedia.com - a Classical Christian Approach to Homeschool ])
To: smoothsailing
As I said when it was released, “soon to be revised,” just like all government-issued economic statistics.
10
posted on
12/26/2014 4:02:24 PM PST
by
clintonh8r
( BRILLIANT, WITTY (but incendiary)TAG LINE REMOVED BY MODERATORS.)
To: smoothsailing
Anyone here ever trade in a used car and play the numbers game?
Its actually quite fun, if you have the cash to control the game.
This is kind of like that, but we have no control (money), because the crooks have already snatched the keys from our trade in car, we can't escape. I damn near assaulted a salesman for not getting my keys back fast enough. He said he would call the police, I said his face will still be swollen and broken when they show up. I got my keys.
This is what this BS cooked book makes us feel like.
Hell no! we don't trust any of it!
11
posted on
12/26/2014 4:13:11 PM PST
by
right way right
(America will reject the suck of Socialist Freedumb, one way or another.)
To: fhayek
Lots of that going on in Houston. Except for the short skirts.
I sometimes wonder if all the doom and gloom people have been predicting and we’ve been expecting may not be coming to past in my lifetime. Which is probably no more than ten years.
Then again, even Quannell X is advising people to store food.
12
posted on
12/26/2014 4:14:50 PM PST
by
VerySadAmerican
(My love affair with an abuser is over. Support a third party.)
To: VerySadAmerican
Good for Houston. I wonder if %55 a barrel oil will cause that to end.
13
posted on
12/26/2014 4:23:50 PM PST
by
fhayek
To: smoothsailing
Where is art and intellectual value in that chart? I know everyone knows the President re-did what goes into determining the GDP. I believe very little in this “Matrix” like imaginary government we have now days.
14
posted on
12/26/2014 4:50:49 PM PST
by
jyro
(French-like Democrats wave the white flag of surrender while we are winning)
To: Vendome
bump
they also hype the DOW as a good sign, even though we all know it is the result of the cheaper dollar.
15
posted on
12/26/2014 5:04:38 PM PST
by
GeronL
(Vote for Conservatives not for Republicans)
To: VerySadAmerican
Salaries are not going up. I’ve worked at the same place for almost 10 years... we had decent enough raises in 2006 through 2008.. but 2008 through 2012 had nothing. zero. Nada. 2013 we had about a 1% payraise, and about that in 2014 as well, actually abut 1.25%.
I am now earning about as much as I did in 2003.
16
posted on
12/26/2014 5:18:26 PM PST
by
ro_dreaming
(Chesterton, 'Christianity has not been tried and found wanting. ItÂ’s been found hard and not tried')
To: Vendome
100%, employers have squeezed the last drop of productivity out of the workforce there was to be had...
pretty much anything else has to come from added jobs, and i don't see any of them
17
posted on
12/26/2014 5:36:45 PM PST
by
Chode
(Stand UP and Be Counted, or line up and be numbered - *DTOM* -w- NO Pity for the LAZY - 86-44)
To: ro_dreaming
I’m sure you’ve had to cut way back over the years and really watch your spending.
I’m on a fixed income and am constantly eating into my savings. We’re determined to cut way back and stick to your budget in 2015. If we don’t, there will come a time very soon where we are forced to cut back because the money just won’t be there.
18
posted on
12/26/2014 10:23:23 PM PST
by
VerySadAmerican
(My love affair with an abuser is over. Support a third party.)
To: smoothsailing
Since when is a government mandated expenseby any sane person’s definition, A TAXa factor in consumer discretionary spending to be counted as part of the “growing economic” activity? Especially, when it is so obvious that when it is accounted for is so, so, so, shall we say”flexible” instead of fictitious?
19
posted on
12/27/2014 2:30:03 AM PST
by
Swordmaker
(This tag line is a Microsoft insult free zone... but if the insults to Mac users contnue...)
To: VerySadAmerican
Yes I have. I have three kids (teen and younger) and my dad moved in three almost four years ago. We spend a lot on groceries and save where we can. We buy store brand, cheaper than name brand and coupons! We buy bulk. We grogrow vegetables and freeze or can what we are able.
I can’t afford my escape anymore either, so looks like I’m on the wagon for now. Of course, my wife still buys cigarettes and beer for her.
20
posted on
12/27/2014 9:21:07 AM PST
by
ro_dreaming
(Chesterton, 'Christianity has not been tried and found wanting. ItÂ’s been found hard and not tried')
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