All the bad data that was trotted out to get Bozo reelected is starting to bounce back.
RE: All the bad data that was trotted out to get Bozo reelected is starting to bounce back.
Obama will blame it on Bush in 5,4,3....
All this was known before the Election.
...However, they point to the contraction in federal spending as the main culprit:
Correct, the sharp GDP contraction was due to government defense spending contraction from sharply "juiced up" defense spending in Q3. Amazingly, Romney and the Republicans somehow didn't make that an issue in their campaigns:
The Pentagon's Timely Contribution to GDP (3rd Quarter 2012) - FR / Barron's, posted by CutePuppy, 2012 November 05
"However, one-third of the increase came from a surge in defense spending which, of course, has nothing to do with the imminent presidential election," Mike writes in italics, in case you didn't get his point.
So in Q4 it was reversed, and what we got was entirely expected, nothing "unexpected" about it: After increasing to a pace of $60.3B in Q3, growth in inventories plunged to $20.0bn in Q4. This swing sliced 1.3% from growth. ... Nonfarm inventories also contracted, which was likely as a result of businesses caught by a stronger demand at year-end. Bounce back in inventories in Q1 could add notably to Q1 GDP growth. ..... Government spending declined 6.6% owing to a 22% drop in defense spending. This more than offset the 12.9% increase in defense spending in 2012Q3. It is possible that the DoD reduced spending in anticipation of the "fiscal cliff" cuts. If the sequester kicks in as expected, we would expect further cuts in government spending starting in 2013Q2. ..... Consumption increased 2.2%, an improvement from the prior two quarters and owing to stronger vehicle sales. Investment surprised on the upside with capex jumping 12.4% and residential investment up 15.3%. Based on the latest core capital goods orders, the gain in capex could persist into 2013Q1, showing further improvement in corporate sector. Also on a positive note, personal income was revised higher in 2012Q4 due to "fiscal cliff" accelerated dividends and bonus income. ..... ... GDP growth was dragged down by a sharp contraction in government defense spending and inventory accumulation, which combined subtracted 2.6% from growth. Outside of these two very volatile components, underlying growth improved with a solid gain in business investment. .....
Basically, "juicing up" (for election purposes) the economy via defense spending in Q3, combined with "fiscal cliff" distortions in the Q4, combined with expectations of sequestration, has led to distortions that will take some time to unravel.
Otherwise, the economic story is the same: corporations are cutting expenses, preparing for mandatory expenses and hoarding cash (particularly overseas) leading to anemic, only necessary hiring, resulting in healthier balance sheets and higher stock prices (don't confuse the health of the stock market with the health of the economy!), elevated un-/under-employment numbers and general "economic "malaise" despite successful heroic efforts of the Fed to keep economy from sliding into recession due to boneheaded fiscal and regulatory policies of the Obama administration.