Daily investment & finance thread (4-26-13 edition)

ping

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Annnddd the finance site that changed my life

www.bogleheads.org

Ditto

Mises wrote this in 1944: http://mises.org/daily/6415/Come-Back-to-Gold

Inflation is essentially antidemocratic. Democratic control is budgetary control. The government has but one source of revenue: taxes. No taxation is legal without parliamentary consent. But if the government has other sources of income it can free itself from this control.

Flash forward to today where Bernanke makes noises about the private economy but all he really does is print money and give it to the politicians (in exchange for worthless t-bills)

In every instance of inflation or credit expansion there are two groups, that of the gainers and that of the losers. The creditors are the losers; it is their loss that is the profit of the debtors....

Under a system of world inflation or world credit expansion every nation will be eager to belong to the class of gainers and not to that of the losers. It will ask for as much as possible of the additionalquantity of paper money or credit for its own country. As no method could eliminate the inequalities mentioned above, and as no just principle for the distribution could be found, antagonims would originate for which there would be no satisfactory solution.

Nobody asks anymore, we all just take. There is considerable resiliance in the world economy from technological advancement and productivity gains. We still invent new ways to save time and be more productive even here. There is even more productivity enhancement in developing countries that are moving people from scratching dirt with sticks to working in big factories.

But instead of the beneficial continuous deflation that this would produce, we spin up a series of inflationary credit bubbles which always will collapse. The worst effects are in those same developing countries which pay high rates due to risk. The bubble starts here (or Japan) with ridiculously low rates, the banksters carry trade that money into foreign economies temporarily driving up that currency and depressing ours. At some point the bubble peaks and rapidly unwinds. The dollar surges, the foreign currency collapes, and the extra leverage unwinds and the usual suspects whine about deflation when in fact it is really just inevitable deleveraging.

It is a form of economic warfare against our opponents like China. They do their best to weaken the Yuan and buy American debt to take part in the Fed-created debt bubble (carry trade in reverse). Unlike shallower economies we do not expand rapidly and crash as easily. But we are expanding (mostly in government) and we will crash when the US treasury debt bubble pops.

Thanks for the daily ping!
Another interesting one on tap...

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Initial GDP estimate out this morning at 8:30. FactSet Consensus is +3.1%. My estimate is +3.3%.

Gonna be a lot of fun watching the people here of FR freak out about this number. What is the over/under on the number of “cooked books” comments?

;-)

on!

Way wrong. GDP +2.5%. That’s a big big miss. Need to see the internatls though...

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EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, FRIDAY, APRIL 26, 2013
BEA 13-18

* See the navigation bar at the right side of the news release text for links to data tables,
contact personnel and their telephone numbers, and supplementary materials.

Lisa S. Mataloni: (202) 606-5304 (GDP) gdpniwd@bea.gov
Recorded message: (202) 606-5306
Jeannine Aversa: (202) 606-2649 (News Media)
National Income and Product Accounts
Gross Domestic Product, First Quarter 2013 (advance estimate)

Real gross domestic product — the output of goods and services produced by labor and property
located in the United States — increased at an annual rate of 2.5 percent in the first quarter of 2013 (that
is, from the fourth quarter to the first quarter), according to the “advance” estimate released by the
Bureau of Economic Analysis. In the fourth quarter, real GDP increased 0.4 percent.

The Bureau emphasized that the first-quarter advance estimate released today is based on source
data that are incomplete or subject to further revision by the source agency (see the box on page 3 and
“Comparisons of Revisions to GDP” on page 5). The “second” estimate for the first quarter, based on
more complete data, will be released on May 30, 2013.

The increase in real GDP in the first quarter primarily reflected positive contributions from
personal consumption expenditures (PCE), private inventory investment, exports, residential investment,
and nonresidential fixed investment that were partly offset by negative contributions from federal
government spending and state and local government spending. Imports, which are a subtraction in the
calculation of GDP, increased.

BOX_______________________
Comprehensive Revision of the National Income and Product Accounts

BEA plans to release the results of the 14th comprehensive (or benchmark) revision of the national
income and product accounts (NIPAs) in conjunction with the second quarter 2013 “advance” estimate
on July 31, 2013. More information on the revision is available on BEA’s Web site at
www.bea.gov/gdp-revisions, including a link to an article in the March 2013 issue of the Survey of
Current Business that discusses the upcoming changes in definitions and presentations, including
capitalizing spending on research and development and on entertainment originals and measuring
transactions of defined benefit pension plans on an accrual accounting basis. An article in the May
Survey will describe changes in statistical methods, and an article in the September Survey will describe
the estimates in detail. Revised NIPA table stubs and news release stubs will be available in June.

FOOTNOTE___________________

Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise
specified. Quarter-to-quarter dollar changes are differences between these published estimates. Percent
changes are calculated from unrounded data and are annualized. “Real” estimates are in chained (2005)
dollars. Price indexes are chain-type measures.

This news release is available on www.bea.gov along with the Technical Note and highlights related to this release.
___________________________

The acceleration in real GDP in the first quarter primarily reflected an upturn in private
inventory investment, an acceleration in PCE, an upturn in exports, and a smaller decrease in federal
government spending that were partly offset by an upturn in imports and a deceleration in nonresidential
fixed investment.

Motor vehicle output added 0.24 percentage point to the first-quarter change in real GDP after
adding 0.18 percentage point to the fourth-quarter change. Final sales of computers subtracted 0.01
percentage point from the first-quarter change in real GDP after adding 0.10 percentage point to the
fourth-quarter change.

The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 1.1 percent in the first quarter, compared with an increase of 1.6 percent in the fourth.
Excluding food and energy prices, the price index for gross domestic purchases increased 1.3 percent in
the first quarter, compared with an increase of 1.2 percent in the fourth.

Real personal consumption expenditures increased 3.2 percent in the first quarter, compared with
an increase of 1.8 percent in the fourth. Durable goods increased 8.1 percent, compared with an increase
of 13.6 percent. Nondurable goods increased 1.0 percent, compared with an increase of 0.1 percent.
Services increased 3.1 percent, compared with an increase of 0.6 percent.

Real nonresidential fixed investment increased 2.1 percent in the first quarter, compared with an
increase of 13.2 percent in the fourth. Nonresidential structures decreased 0.3 percent, in contrast to an
increase of 16.7 percent. Equipment and software increased 3.0 percent, compared with an increase of
11.8 percent. Real residential fixed investment increased 12.6 percent, compared with an increase of
17.6 percent.

Real exports of goods and services increased 2.9 percent in the first quarter, in contrast to a
decrease of 2.8 percent in the fourth. Real imports of goods and services increased 5.4 percent, in
contrast to a decrease of 4.2 percent.

Real federal government consumption expenditures and gross investment decreased 8.4 percent
in the first quarter, compared with a decrease of 14.8 percent in the fourth. National defense decreased
11.5 percent, compared with a decrease of 22.1 percent. Nondefense decreased 2.0 percent, in contrast
to an increase of 1.7 percent. Real state and local government consumption expenditures and gross
investment decreased 1.2 percent, compared with a decrease of 1.5 percent.

The change in real private inventories added 1.03 percentage points to the first-quarter change in
real GDP after subtracting 1.52 percentage points from the fourth-quarter change. Private businesses
increased inventories $50.3 billion in the first quarter, following increases of $13.3 billion in the fourth
quarter and $60.3 billion in the third.

Real final sales of domestic product — GDP less change in private inventories — increased 1.5
percent in the first quarter, compared with an increase of 1.9 percent in the fourth.

Gross domestic purchases

Real gross domestic purchases — purchases by U.S. residents of goods and services wherever
produced — increased 2.9 percent in the first quarter; it was unchanged in the fourth quarter.

Disposition of personal income

Current-dollar personal income decreased $109.1 billion (3.2 percent) in the first quarter, in
contrast to an increase of $262.3 billion (8.1 percent) in the fourth. The downturn in personal income
primarily reflected a sharp downturn in personal dividend income and a sharp acceleration in
contributions for government social insurance — a subtraction in the calculation of personal income.
Fourth-quarter personal dividend income was boosted by the payment of accelerated and special
dividends. The acceleration in contributions for government social insurance in the first quarter resulted
from the expiration of the “payroll tax holiday.”

Personal current taxes increased $27.2 billion in the first quarter, compared with an increase of
$34.3 billion in the fourth.

Disposable personal income decreased $136.3 billion (4.4 percent) in the first quarter, in contrast
to an increase of $228.0 billion (7.9 percent) in the fourth. Real disposable personal income decreased
5.3 percent, in contrast to an increase of 6.2 percent.

Personal outlays increased $116.3 billion (4.1 percent) in the first quarter, compared with an
increase of $97.0 billion (3.4 percent) in the fourth. Personal saving — disposable personal income less
personal outlays — was $313.3 billion in the first quarter, compared with $566.0 billion in the fourth.

The personal saving rate — personal saving as a percentage of disposable personal income — was
2.6 percent in the first quarter, compared with 4.7 percent in the fourth. For a comparison of personal
saving in BEA’s national income and product accounts with personal saving in the Federal Reserve
Board’s flow of funds accounts and data on changes in net worth, go to
www.bea.gov/national/nipaweb/Nipa-Frb.asp.

Current-dollar GDP

Current-dollar GDP — the market value of the nation’s output of goods and services — increased
3.7 percent, or $146.1 billion, in the first quarter to a level of $16,010.2 billion. In the fourth quarter,
current-dollar GDP increased 1.3 percent, or $53.1 billion.

BOX_____________________
Information on the assumptions used for unavailable source data is provided in a technical note
that is posted with the news release on BEA’s Web site. Within a few days after the release, a detailed
“Key Source Data and Assumptions” file is posted on the Web site. In the middle of each month, an
analysis of the current quarterly estimate of GDP and related series is made available on the Web site;
click on Survey of Current Business, “GDP and the Economy.” For information on revisions, see
“Revisions to GDP, GDI, and Their Major Components.”
________________________

BEA’s national, international, regional, and industry estimates; the Survey of Current Business;
and BEA news releases are available without charge on BEA’s Web site at www.bea.gov. By visiting the
site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.

* * *

Next release — May 30, 2013, at 8:30 A.M. EDT for:
Gross Domestic Product: First Quarter 2013 (Second Estimate)
Corporate Profits: First Quarter 2013 (Preliminary Estimate)

Comparisons of Revisions to GDP

Quarterly estimates of GDP are released on the following schedule: the “advance” estimate, based on
source data that are incomplete or subject to further revision by the source agency, is released near the end of the
first month after the end of the quarter; as more detailed and more comprehensive data become available,
the “second” and “third” estimates are released near the end of the second and third months, respectively.
The “latest”” estimate reflects the results of both annual and comprehensive revisions.

Annual revisions, which generally cover the quarters of the 3 most recent calendar years, are usually carried
out each summer and incorporate newly available major annual source data. Comprehensive (or benchmark)
revisions are carried out at about 5-year intervals and incorporate major periodic source data, as well as
improvements in concepts and methods that update the accounts to portray more accurately the evolving U.S.
economy.

The table below shows comparisons of the revisions between quarterly percent changes of current-dollar
and of real GDP for the different vintages of the estimates. From the advance estimate to the second estimate (one
month later), the average revision to real GDP without regard to sign is 0.5 percentage point, while from the
advance estimate to the third estimate (two months later), it is 0.6 percentage point. From the advance estimate to
the latest estimate, the average revision without regard to sign is 1.3 percentage points. The average revision
(with regard to sign) from the advance estimate to the latest estimate is 0.2 percentage point, which is larger
than the average revisions from the advance estimate to the second or to the third estimates. The larger average
revisions to the latest estimate reflect the fact that comprehensive revisions include major improvements, such as
the incorporation of BEA’s latest benchmark input-output accounts. The quarterly estimates correctly indicate the
direction of change of real GDP 97 percent of the time, correctly indicate whether GDP is accelerating or
decelerating 72 percent of the time, and correctly indicate whether real GDP growth is above, near, or below trend
growth more than four-fifths of the time.

Revisions Between Quarterly Percent Changes of GDP: Vintage Comparisons
[Annual rates]

Vintages Average Average without Standard deviation of
compared regard to sign revisions without
regard to sign

____________________________________________________Current-dollar GDP_______________________________________________

Advance to second.................... 0.2 0.6 0.4
Advance to third..................... .1 .7 .4
Second to third...................... .0 .3 .2

Advance to latest.................... .3 1.2 1.0

________________________________________________________Real GDP_____________________________________________________

Advance to second.................... 0.1 0.5 0.4
Advance to third..................... .1 .6 .5
Second to third...................... .0 .2 .2

Advance to latest.................... .2 1.3 1.0

NOTE. These comparisons are based on the period from 1983 through 2009.

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