Crazy Germans... ;-)
Deutsche Bank Strays From The Wall Street Heard And Predicts A Massive GDP Report
On Wednesday, the Bureau of Economic Analysis will release its first estimate of Q2 GDP.
The average economist on Wall Street is looking for 3.0% growth, after the 2.9% drop in Q1. Citi, Barclays, Nomura, Goldman Sachs, and UBS are among the big names forecasting between 2.9% and 3.1% growth.
Deutsche Bank’s Joe LaVorgna is sticking his neck out, predicting the figure will come in at 4.2%.
In a new note, the LaVorgna explains why there’s a good chance that estimate will prove low: it assumes a conservative rate of productivity.
Productivity is defined as GDP over hours worked. Recent data suggests Q2 hours climbed at a 3.8% annualized rate. Assuming a 4.2% GDP rate, we get productivity growth of 0.4%. But major declines in productivity are often followed by a snapback the following quarter. And data show productivity fell 5.8% in Q1. That could yet be revised even lower.
The Germans are crazy....but they have a beautiful country.
I’m just not confidant in this part-time employment/low participation economy that consumer spending can be all that exciting. Plus the spending that does take place for financially struggling lower middle class has to all be from cheap imported stuff.
I’m puzzled about ObamaCare, but it boils down to less spending on healthcare in that disastrous first quarter. How could that have improved that much?
I assume these banks know what they’re saying, but weren’t they all predicting growth instead of contraction the last quarter?