Market Mover Friday: First read of 4Q GDP…

Update: CalculatedRisk has the economic chops to be believed when they give the analysis that MiM does (we do it with no economic degree just Main St instincts), so here it is:

Any analysis of the Q4 GDP report has to start with the change in private inventories. This change contributed a majority of the increase in GDP, and annualized Q4 GDP growth would have been 2.3% without the transitory increase from inventory changes.

Unfortunately – although expected – the two leading sectors, residential investment (RI) and personal consumption expenditures (PCE), both slowed in Q4.

  • PCE slowed from 2.8% annualized growth in Q3 to 2.0% in Q4.
  • RI slowed from 18.9% in Q3 to just 5.7% in Q4
  • …The transitory boost from inventory changes is frequently a great kick start to the economy at the beginning of a recovery – as long as the leading sectors (PCE and RI) are also picking up. This report has to be viewed as concerning … and is reminiscent of Q1 1981 and Q1 2002 … both examples of inventory changes making large contributions to GDP, but underlying growth remained weak.

    Update: Comes in at 5.7%. Yowsa, double dip baby….no way they maintain….

    Should be a nice reading with the sugar high provided by government spending inventory build! Govt spending in this GDP went down, kewlin’. . Update 2: Well Christy Romer wants to give the stimulus credit, so the govt contribution to this GDP data is big in her definition:

    CEA chair Christie Romer blogs on the latest economic data:

    This broad-based rise in GDP was surely fueled in part by the tax cuts and investment spending in the Recovery Act and other rescue actions, but some appears to be the result of private sector demand returning.

    Ironically the higher it is, the more likely IMO the double dip comes sooner. That rate of ‘growth’ cannot possibly be sustained. Team Obama no doubt hopes the 1 million temporary census jobs coming on board combined with this goosed up juiced up GDP reading will make everyone feel good.

    GDP data is not enough to create consumer spending. Neither are the temporary 1 million $18.00 an hour Census jobs (although we should get a nifty bump). We need sustained private sector job creation and in this ‘anything can happen’ Obama political environment we will not get that. Mid term electiomns cannot come soon enough,. Once we preclude the possibility of passage of regressive economic policy the economy can get back to growing….

    CNBC:

    …A Reuters survey predicted that gross domestic product, which measures total goods and services output within U.S. borders, expanded at a 4.6 percent annual rate, up from 2.2 percent in the third quarter.

    Analysts reckon the change in inventories could constitute as much as three-quarters of the GDP figure and overstate the strength of the recovery from the longest and deepest downturn since the Great Depression 70 years ago.

    “We shouldn’t dismiss it (GDP number), but the problem is the inventory cycle really doesn’t last that long. It’s not what we call self-sustaining growth,” said Paul Ashworth, senior U.S. economist at Capital Economics in Toronto….

    Inventory builds are nice but they generally happen when business expects consumers to you know, buy things. What this number represents is similar to the 400k in lost jobs we are seeing in the weekly data. It is ‘less awful’ than earlier readings, IMO b/c there are hardly any workers left to fire, and not much more productivity to be squeezed out of businesses at this point. Shelves are empty so some inventory build is expected. (UPDATE: Inventory Build was 3.5% of this GDP number) Again not meaningful without the consumer engine, for that we need JOBS.

    …Consumer spending is expected to have risen in the last three months of 2009, but below the 2.8 percent annual pace in the prior quarter, when consumption got a boost from the government’s “cash for clunkers” program.

    Spending has been hamstrung by the worst labor market in a quarter century. Analysts noted that during periods of strong economic growth, consumer spending was rising at an average of 4 percent a year.

    “If you are looking for a strong and sustainable recovery, it’s hard to see that happening unless consumption accelerates,” said Capital Economics’ Ashworth….

    January 29, 2010. Tags: , , , , , , . Comedy, Economy, Finance, Obama Administration, Politics, Popular Culture, Taxes, Unemployment Statistics, Wall St. Comments off.

    NABE Economic Forecast – calls for job growth in 2Q 2010

    Update: The NABE forecast expects the 7 million jobs lost to date will not be restored until 2012, even if they are counting the 1 million temporary census jobs in their 2Q ’10 Job Growth, I think the Dems are cooked :

    WSJ: …While the recovery has been jobless so far, that should soon change. Within the next few months, companies should be adding instead of cutting jobs,” said NABE President Lynn Reaser. According to the survey conducted Oct. 24-Nov. 5, the recovery, fueled by rising business investments and a continued increase in stock prices, should be strong enough to bring employment gains from around April 2010. Still, with more than 7.3 million jobs lost since December 2007, 61% of the panelists don’t expect a complete recovery of the previously lost jobs until 2012…

    Hamstrung by the nation’s $1.4 trillion deficit and his pledge not to raise taxes on middle-class Americans, Mr. Obama is keen to avoid any measures suggestive of a second, big-ticket stimulus. With about half of the February stimulus spending spoken for, the measure has created about 640,000 jobs, fewer than the number of jobs lost in January alone…

    Vodpod videos no longer available.

    NABE revising its forecast, calling for job growth in 2Q 2010. God willing it will be so. I see nothing to indicate this Administration will suddenly moderate it’s out of control spending and reimagining of our economy. Unless China let them know they MUST get their fiscal shxt together or face no purchasers for our debt. Even then I do not see how Obama can pull this out. He is ramming through the 3 trillion health care bill anyway and he will be politically destroyed if he tries to raise taxes before the 2010 elections….IOW the Dem. majority is fxcked.

    more about “NABE Economic Forecast – calls for jo…“, posted with vodpod

    November 23, 2009. Tags: , , , , , . Economy, Finance, Obama Administration, Politics, Taxes, Unemployment Statistics, Wall St. Comments off.

    Weekly jobless claims rise more than forecast – last week revised higher; Moody’s says US could lose AAA rating without deficit cuts..

    wall_st_bear_small

    WSJ:

    Stock futures pulled back from their early morning highs Thursday as the number of U.S. workers filing new claims for jobless benefits rose more than economists expected last week….

    …Weighing on stocks, the U.S. Labor Department said initial claims for jobless benefits rose by 11,000 to 531,000 in the week ended Oct. 17. The previous week’s level was revised from 514,000 to 520,000.

    Economists surveyed by Dow Jones Newswires had expected only a slight increase of 4,000, with the report serving as another sign of tough times for the jobs market….

    Moody’s tells the WH and Congress to STOP SPENDING (in so many words, lol, we need to get the deficit down and no SANE person would raise taxes in a recessionary, zero job growth environment, right? Bueller? Bueller?!):

    The United States, which posted a record deficit in the last fiscal year, may lose its AAA-rating if it does not reduce the gap to manageable levels in the next 3-4 years, Moody’s Investors Service said on Thursday.

    The U.S. government posted a deficit of $1.417 trillion in the year ended Sept. 30 as the deep recession and a series of bank rescues cut a gaping hole in its public finances…

    October 22, 2009. Tags: , , , , , , , . Economy, Labor Department, Obama Administration, Politics, Taxes, Unemployment Statistics, Wall St. Comments off.

    NABE Forecast: More job losses ahead

    WSJ discusss the anti growth measures coming from Congress and the impact they have on job creation – that being they kill it.

    wsjstimulusjobschart

    Meanwhile no action in the Senate on the UE extension as they wrangle over health care which is NOT a crisis; and on the House side,  Pelosi is back to the drawing board talking to economists again, b/c her first swing at a stimulus went so well eh? NOT!

    In other good news NABE (the group that officially call the recessions and what have you correction, that is the NBER) has a jobless forecast:

    The worst U.S. recession since the Great Depression has ended, but weak household spending as the labor market struggles to create jobs will slow the pace of the economy’s recovery, according to a survey released Monday.

    …The NABE survey, conducted in September, predicted real GDP growth expanding at a 2.9 percent pace over the second half of this year. Output for the whole of 2009 is expected to contract 2.5 percent and next year, rebound to 2.6 percent.Much of the anticipated recovery was seen driven by businesses rebuilding their inventories after aggressively reducing unwanted stocks of unsold goods to match weak demand…(Gee sounds like MiM’s forecast from last July, lol)

    …The survey predicted that the unemployment rate would rise to 10 percent in the first quarter of 2010 and edge down to 9.5 percent by the end of that year. The labor market was not expected to regain most the jobs destroyed in the current recession until 2012 or beyond....

    CNBC:

    (…)Rob Shapiro, an economist who was a top official in President Bill Clinton’s Commerce Department, sees “substantial, continued job losses” for some time if the government doesn’t take more aggressive steps to foster job growth.In the meantime, the Obama administration should “prepare the American people to wait a while for real results,” said Shapiro, now with a Democratic think tank called NDN.

    October 12, 2009. Tags: , , , , , , , , , , , , , . Economy, Finance, Healthcare, Labor Department, Obama Administration, Politics, Taxes, Unemployment Statistics. Comments off.

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