Gain in exports points to dramatic revisions in GDP [My title]

Econoday ^ | 4/14/2004

[Tennessean4Bush]

I have read several reports that the trade data today, coupled with the retail sales and inventory data yesterday, all point to GDP growth approaching the blistering pace of 3rd quarter 2003 (i.e. 7.2%).

Any predictions?

[Tennessean4Bush]

bttt mice elf

[Jorge]

How can this be in the WORST economy since Herbert Hoover?

[babble-on]

no, its all a disaster. aren't you miserable? I mean Kerry's misery index is at an all time high, so surely we must all be miserable.

[Tennessean4Bush]

Excerpted from http://biz.yahoo.com/rb/040414/economy_6.html

Analysts said the smaller-than-expected trade deficit meant forecasts for first-quarter U.S. economic growth would need to be bumped up toward a hefty 5 percent annual rate.

[Southack]

The funny thing about the trade deficit is that it is seriously backloaded to re-valuations in the Dollar. The Dollar versus foreign currencies like the Euro has dropped 20+% in the last year, and we are only now starting to see it impact the trade deficit in a positive way for us.

But for the next year we'll not only be reaping the benefits of that re-valuation, but also watching the Dollar fall a bit further...giving us many future years of benefits as American exports become cheaper for foreign nations to buy.

American exports alone could potentially add a full 1% to annual national GDP growth due to this Dollar re-valuation (an increase of roughly $12 Billion per month domestically).

This sort of export-led growth should act like garlic towards the vampires of "Zero-Sum Currency" (AKA "Strong Dollar") theories, too.

[Tennessean4Bush]

Excerpted from http://biz.yahoo.com/rf/040414/economy_growth_1.html

"Analysts think Gross Domestic Product, essentially the sum of every dollar spent in the economy, grew around 5.0 percent annualized in the first quarter, compared with 4.0 percent just a few weeks ago. If they are right, that would be the best first-quarter performance since 1984."

[rwfromkansas]

Ultimately, I think in a strong nation like ours, weak dollar or strong dollar, things are positioned to be good for us somehow. It may take time for the economy to adjust to the new conditions, but often it will adjust just fine. Not always, but often.

Now, I just took macro and micro econ...would have to study it in grad school to actually have a clue what I am saying...but that is the way it seems to me.

[Tennessean4Bush]

Excerpted from http://www.usatoday.com/money/economy/2004-04-14-growth-forecasts-raised_x.htm

"The implications of these data are massive," says Steve Stanley, chief economist at Greenwich Capital Markets, also responding to the retail sales report. "Off the top of my head, I would say that we just moved from 4% gross-domestic-product growth in (the first quarter of 2004) to something like 5%."

Brian Wesbury of Griffin Kubik Stephens & Thompson, a Chicago-based investment bank, predicted the government could report a 6% growth rate in the GDP, the broadest measure of goods and services produced in the USA.

[Southack]

"Ultimately, I think in a strong nation like ours, weak dollar or strong dollar, things are positioned to be good for us somehow."

Here's the "somehow."

1. Productivity is up
2. Interest rates are low
3. Inflation is still low
4. Unemployment is low
5. Population is increasing
6. Dollar is trending down (this is a good thing)
7. Exports are up
8. Labor pool is adequate
9. Money and credit policies are loose

[Southack]

Right. 5% to 6% GDP growth for 1st Quarter 2004 will end up being reported.

So sound the trumpets and sing Hallalujah!

[Howlin]

I hope you are right!

[Moonman62]

Ultimately, I think in a strong nation like ours, weak dollar or strong dollar, things are positioned to be good for us somehow. It may take time for the economy to adjust to the new conditions, but often it will adjust just fine. Not always, but often.

As soon as the private sector adjusts, the federal government will go to a strong dollar policy. They've been inducing these cycles for decades.

[SierraWasp]

I just got an email from a fellow FReeper that the Repellicans in CONgress are trying, once again, to "prempt another Dem issue" by proposing a minimum wage increase before Teddy "The Commie" Kennedy gets to make it an election issue for John "The Commie" Kerry!!!

This race to prempt supidity is getting on my nerves... BIGTIME!!! Will you please make them stop this? They think it's so clever, but it'snot!!!

[farmfriend]

Minimum wage hike
Senate GOP seeks to neutralize key election-year issue

[Tennessean4Bush]

Yuck.

[E.G.C.]

BTTT!!!!!!!

[Carry_Okie]

But for the next year we'll not only be reaping the benefits of that re-valuation, but also watching the Dollar fall a bit further...giving us many future years of benefits as American exports become cheaper for foreign nations to buy.

It also means the imports will cost more dollars. As long as US substitute goods are not available, a weak dollar doesn't do much to reduce a trade deficit. Unless we do something about the real factors destroying American jobs, primarily stemming from government regulation (about which Bush has done little), the lower of the two graphs above suggests that we shouldn't exactly be celebrating.

[dennisw]

Idiocy. The trade deficit is a killer and is the same as it was.

OK ... down a teensy bit

[dennisw]

There is huge "deficits don't matter" crowd at FR. If deficits don't matter why the big deal about a very slight narrowing of our trade deficit?