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 ...
3.8% I knew it was more Democratic lies.
Barry, Nancy, and Harry LIE! I’m shocked. /s
Stop with the estimates already—that’s low enough! I know, I know, it is what it is.
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!
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]
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.”
Tell me something I don’t know!
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.
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.
“..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.
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.
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.
Ok, I see it. Extra shopping gave a big boost to sales. And?
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?
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.
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.
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
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.
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