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That Horrible Q3 GDP Report Was Even Worse Than You Thought
The Business Insider ^ | 12-28-2009 | Joe Weisenthal and Kamelia Angelova

Posted on 12/28/2009 7:22:28 PM PST by blam

That Horrible Q3 GDP Report Was Even Worse Than You Thought

Joe Weisenthal and Kamelia Angelova
Dec. 28, 2009, 5:53 PM

Last week the Commerce Department announced that in Q3 GDP had been revised down to 2.2% growth after first clocking in at a brisk 3.8%. The number was the latest blow to those who are still holding out hopes of a V-shaped recovery.

Not only was the headline number disappointing, but a deeper drill-down is also depressing. As Goldman Sachs analyst Jan Hatzius pointed out in a recent note, major GDP components, including consumption, residential investment, and business investment decline in lockstop. There were no outliers distorting the number.

Quite simply, across the board, things aren't as good as we thought... or hoped.


(Excerpt) Read more at businessinsider.com ...


TOPICS: News/Current Events
KEYWORDS: chart; economy; gdp
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1 posted on 12/28/2009 7:22:31 PM PST by blam
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To: blam

3.8% I knew it was more Democratic lies.


2 posted on 12/28/2009 7:26:47 PM PST by Plumres
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To: blam

Barry, Nancy, and Harry LIE! I’m shocked. /s


3 posted on 12/28/2009 7:27:07 PM PST by VRWC For Truth (Throw the bums out who vote yes on the bail out)
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To: blam

Stop with the estimates already—that’s low enough! I know, I know, it is what it is.


4 posted on 12/28/2009 7:30:03 PM PST by skr (May God confound the enemy)
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To: blam

The fed’s pushing on a string. All that stimulus somehow leaked out into gold and equities, but not a lot of business or consumer stimulation.

Surprised?

Here’s another version of the same sad song: http://business.theatlantic.com/2009/12/why_was_q3_gdp_growths_revised_downward_to_22.php

Hope you had a Merry Christmas!


5 posted on 12/28/2009 7:32:26 PM PST by Nervous Tick (Stop dissing drunken sailors! At least they spend their OWN money.)
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To: Nervous Tick
Why Was Q3 GDP Growth Revised Downward To 2.2%?

As Megan just mentioned, GDP growth was revised downward, again, today by the Commerce Department. It started at 3.5% in October, only to be revised down to 2.8% in November. Now we learn that it was really just 2.2%.
That means that GDP growth was originally forecast to be more than 50% higher than we now know it is, as 2.2% is final. Megan explained that most of the quarter's growth can be attributed to cash-for-clunkers. So what made for the overestimates in prior months?

I find the reasons for the latest downgrade particularly troubling. The Associated Press explains:

The main factors behind the downgrade: consumers didn't spend as much, commercial construction was weaker, business investment in equipment and software was a bit softer and companies cut back more on inventories. Consumer spending is a huge portion of GDP -- around 70%.
If that isn't recovering as quickly as economists thought, then it could pose a threat for growth in subsequent quarters. Yet, I can't say I find it surprising that consumers are still reluctant to spend in this economic environment.

Weaker commercial construction also means bad news for employment prospects. Construction was one of the worst hit industries, so a steeper recovery there would also have been a good sign for jobless Americans who work in that sector.

Finally, business investment might be the U.S.'s best chance for seeing a real recovery take hold. Consumers aren't likely to do it with their wallets at 10% unemployment, but businesses could be more comfortable spending with their expenses cut to the bone and inventories depleted. So seeing that number come in softer is particularly worrying.

Of course, the optimists out there will continue to celebrate 2.2%. After all, it's still positive, right? That's a lot better than the quarters prior. Maybe I'm just not squinting hard enough.

[snip]

6 posted on 12/28/2009 7:37:45 PM PST by blam
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To: blam; All

2.2% was below expectations, but hardly “horrible.” The piece cites a Goldman analyst without noting Goldman is looking for a 4%-4.5% Q4, as is most of the Street.

And the initial 3.8% read was a first estimate that was revised. It’s nothing sinister, it’s just the nature of statistical estimates being refined once more data is available. It happens all the time. These are career stats people in BEA, not political people.

Please, guys, be pessimistic on the economy if you want, but let’s not turn into to those tin-foil hat fools at DU who couldn’t get a single positive GDP or jobs number under Bush without crying “books are cooked.”


7 posted on 12/28/2009 7:41:44 PM PST by GOP_Resurrected
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To: blam

Tell me something I don’t know!


8 posted on 12/28/2009 7:43:03 PM PST by Circle_Hook (Keep your powder dry.............You might need it soon!)
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To: blam

The problem with these numbers is that they don’t correct for distortions in the auto market due to clash for clunkers and housing because of first time homeowner’s credit. Factor for that and the number are even worse.


9 posted on 12/28/2009 7:44:10 PM PST by Fractal Trader
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To: GOP_Resurrected
Please, guys, be pessimistic on the economy if you want, but let’s not turn into to those tin-foil hat fools at DU who couldn’t get a single positive GDP or jobs number under Bush without crying “books are cooked.”

True enough, revising downward may not be a partisan act.

We would have more faith in the early numbers if the revisions were a mix of upward and downward. Without knowing this, criticism is vapid.

10 posted on 12/28/2009 7:51:30 PM PST by cicero2k
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To: GOP_Resurrected
See post #2 on this thread.
11 posted on 12/28/2009 7:51:56 PM PST by blam
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To: blam

“..businesses could be more comfortable spending with their expenses cut to the bone and inventories depleted.”

No private enterprise is going to spend needlessly or hire when they have no clue what this poor excuse for an Administration is going to do to them next! All spending will be strictly close to the vest and any extra people will be contractors or temps.


12 posted on 12/28/2009 7:58:20 PM PST by Rembrandt
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To: Fractal Trader
The problem with these numbers is that they don’t correct for distortions in the auto market due to clash for clunkers and housing because of first time homeowner’s credit. Factor for that and the number are even worse.

Didn't I read that the auto bailout alone accounted for 1.7percentage points of the 3Q numbers? Under the original numbers, that was merely half. Under the new numbers, that's nearly the entire GDP increase.

13 posted on 12/28/2009 8:00:25 PM PST by FateAmenableToChange
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To: blam
Last week the Commerce Department announced that in Q3 GDP had been revised down to 2.2% growth after first clocking in at a brisk 3.8%. The number was the latest blow to those who are still holding out hopes of a V-shaped recovery.

Think about that! They were only overestimating the growth by 58%. This is just like the NYT putting little bits of dishonest info in an article on A1 and then posting a retraction on A-18. The dishonest fact is placed into the mainstream but the retraction is then essentially hidden to allow the lie to live.

14 posted on 12/28/2009 8:05:52 PM PST by torchthemummy (No Obama: Not Because He's Black But Because He's Red)
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To: blam

Ok, I see it. Extra shopping gave a big boost to sales. And?


15 posted on 12/28/2009 8:07:24 PM PST by GOP_Resurrected
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To: blam

I’m happy the GDP was positive in Q3! It means when Q4 is announced negative, and Q1 2010 is also negative, it’s the start of the Obama recession - after all, the recession ended in Q3, right?


16 posted on 12/28/2009 8:11:15 PM PST by PugetSoundSoldier (Indignation over the Sting of Truth is the defense of the indefensible)
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To: GOP_Resurrected
"And?

You're the guy that doesn't like to see bad news posted but you always show up when-ever it is . I was only directing you to a good news thread that you never seem to be able to locate.

17 posted on 12/28/2009 8:18:23 PM PST by blam
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To: blam

It being your link I was preparing to look for some dark cloud in the silver lining. But fair enough, I did take your suggestion and start posting positive pieces myself, though.


18 posted on 12/28/2009 8:25:46 PM PST by GOP_Resurrected
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To: FateAmenableToChange; Fractal Trader
Others argue that “cash for clunkers” artificially and temporarily boosted the economy, but each passing month makes that argument less plausible. Americans bought cars and light trucks at a 10.4 million annualized rate in October and a 10.9 million pace in November. This is well above the preclunker pace of 9.7 million in June.

Comparing November to June shows auto sales are up at a 33% annual rate, and there was supposed to be a clunkers hangover. Imagine what sales would have been in November if we hadn’t subsidized them back in July/August!

http://www.ftportfolios.com/Commentary/EconomicResearch/2009/12/14/its_not_the_governments_recovery

19 posted on 12/28/2009 8:28:04 PM PST by GOP_Resurrected
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To: GOP_Resurrected
"It being your link I was preparing to look for some dark cloud in the silver lining. But fair enough, I did take your suggestion and start posting positive pieces myself, though."

I have been on this site for over ten years and have posted over 10,000 threads here...~90% of those threads are about anthropology or archaeology.

You have no idea what you're talking about.

20 posted on 12/28/2009 9:11:29 PM PST by blam
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