5.7% GDP Growth for Fourth Quarter 2009

[Carmen813]

http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

According to Nate Silver @ fivethirtyeight.com "If you pull out the impacts of the inventory bounce, cash-for-clunkers and gov't consumption, you're left with 2.9% growth."

Seems respectable to me.

 

[blackangst1]

Not bad actually.

 

[piasabird]

The numbers were probably fudged a bit. When you consider that the population keeps growing and inflation is around 4% that does not mean squat. I kind of wonder how careful these figures are prepared. This could reflect a shift in vehicle production on the USA side and a reduction on the Japanese and foreigh vehicle production. With this new recall of japanese cars you may some shifts in preference.

It will be interesting to see what kind of changes in population are indicated after the Census results are in.

 

[sciwizam]

The last 2 times they came out with estimates, they were revised down ultimately. I'll wait for the revisions.

The last time it went from an initial estimate of +3.5% to +2.2%.

 

[StageLeft]

It's good growth but GDP growth is also based on government expenditures which have been through the roof bought on deficits.

 

[LTC8K6]

Changes to inventories added 3.4 percentage points to the fourth-quarter growth, the Commerce Department said in its report Friday. Excluding inventories, the economy would have grown at a 2.2 percent clip, the government said.

Apparently it's actually 2.2%...

 

[Genx87]

So, does the Fed jack up the rate because of govt spending?

 

[QuantumPion]

So, does the Fed jack up the rate because of govt spending?

Yeah I was about to post this. How much of that GDP growth is government debt spending?

 

[Carmen813]

Did you guys even read my first post, or just the headline?

According to Nate Silver @ fivethirtyeight.com "If you pull out the impacts of the inventory bounce, cash-for-clunkers and gov't consumption, you're left with 2.9% growth."

 

[dullard]

The numbers were probably fudged a bit. When you consider that the population keeps growing and inflation is around 4% that does not mean squat.

It will be interesting to see what kind of changes in population are indicated after the Census results are in.

Population grows at a rate of ~0.5% per year due to births and another ~0.5% per year due to immigration (legal and illegal). Thus, in all GDP numbers you need to realize that 1% of the growth is due to population change. I've been pushing for population change to be included in the official GDP number but no one would listen to a lowly person like me.

Inflation is no where near 4%. I don't know what you are smoking.

First, GDP already includes inflation adjustment. If inflation were really 4%, then the economy grew at 9.7% and inflation adjusted it is 5.7%. We all know that didn't happen. And you don't double count for inflation like you are implying.

Second, we know what the GDP is. Look here! The average price of a basket of goods over all of 2008 was 215.3 and the average price of the same basket of goods over all of 2009 was 214.5. Thus prices dropped by an average of 0.4%. Dropped, not gained. -0.4% not 4%. Look at that very bottom number on the right hand side: -0.4%.

But if you don't like that -0.4% measure, due to gas price spike, try this on for size. Try looking at Dec 2007 vs Dec 2009 (dates which EXCLUDE the peak in 2008). The average inflation in the two years was 1.4%. That 1.4% is the lowest since the 1960s. Inflation isn't 4%, inflation is quite low.

 

[woolfe9999]

Population grows at a rate of ~0.5% per year due to births and another ~0.5% per year due to immigration (legal and illegal). Thus, in all GDP numbers you need to realize that 1% of the growth is due to population change. I've been pushing for population change to be included in the official GDP number but no one would listen to a lowly person like me.

There is another statistic called GDP per capita, no? The point of not including pop growth in the raw GDP number is that raw GDP is a comparative stat to show the overall size of our economy versus other nations.

If China is considered such an emerging economic threat to the US because it now has the second highest GDP in the world, why are people not considering the size of its population and comparing only our per capita GDP to theres? If you look at it that way, China appears to be a lightweight...

- wolf

 

[woolfe9999]

http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

According to Nate Silver @ fivethirtyeight.com "If you pull out the impacts of the inventory bounce, cash-for-clunkers and gov't consumption, you're left with 2.9% growth."

Seems respectable to me.

It's actually quite encouraging news, particularly if it holds up after revision. 2.9% private sector growth alone is more than respectable relative to expectations.

- wolf

 

[dullard]

There is another statistic called GDP per capita, no? The point of not including pop growth in the raw GDP number is that raw GDP is a comparative stat to show the overall size of our economy versus other nations.

If China is considered such an emerging economic threat to the US because it now has the second highest GDP in the world, why are people not considering the size of its population and comparing only our per capita GDP to theres? If you look at it that way, China appears to be a lightweight.

- wolf

I realize that, but everyone here uses the raw GDP to debate policies within the US. And in that case, we should use the change GDP per capita, not the raw GDP change.

 

[LTC8K6]

"Excluding inventories, the economy would have grown at a 2.2 percent clip, the government said. "

Hello...is anybody in there?

 

[dullard]

How much of that GDP growth is government debt spending?

I also wish we'd focus more on (GDP - goverment deficit). That way, we can strip the easy politics out of the picture.

You can artificially make GDP look big by (a) cutting taxes or (b) increasing spending. Obama chose path (b). The stimulus artifically makes GDP look like it is growing fast. It is growing fast, but it isn't sustainable. We cannot keep stimulating forever, it is a temporary few blips instead. Bush took the opposite tactic. He artificially increased GDP by cutting taxes. We all know what happened to that house of cards. Same thing will happen to Obama without fundamental changes beyond his control. Eventually spending increases must be matched with tax increases (harming GDP). Or with tax cuts, eventually you have spend less (harming GDP). Two sides of the same GDP rigging coin.

When you look at GDP - deficit, that is all stripped out.

 

[woolfe9999]

I also wish we'd focus more on (GDP - goverment deficit). That way, we can strip the easy politics out of the picture.

You can artificially make GDP look big by (a) cutting taxes or (b) increasing spending. Obama chose path (b). The stimulus artifically makes GDP look like it is growing fast. It is growing fast, but it isn't sustainable. We cannot keep stimulating forever, it is a temporary few blips instead. Bush took the opposite tactic. He artificially increased GDP by cutting taxes. We all know what happened to that house of cards. Same thing will happen to Obama without fundamental changes beyond his control. Eventually spending increases must be matched with tax increases (harming GDP). Or with tax cuts, eventually you have spend less (harming GDP). Two sides of the same GDP rigging coin.

When you look at GDP - deficit, that is all stripped out.

Actually Obama chose both paths (a) and (b). Another correction, with your (GDP - government deficit) should be subtracting only foreign debt. Money owed to Americans or other parts of our government is part of our economy. I'm not saying the domestic debt isn't a problem, but only foreign debt can logically be subtracted from GDP.

- wolf

 

[Dari]

The numbers were probably fudged a bit. When you consider that the population keeps growing and inflation is around 4% that does not mean squat. I kind of wonder how careful these figures are prepared. This could reflect a shift in vehicle production on the USA side and a reduction on the Japanese and foreigh vehicle production. With this new recall of japanese cars you may some shifts in preference.

It will be interesting to see what kind of changes in population are indicated after the Census results are in.

The recalled vehicles were not Japanese. They were American. This hurts the US economy and helps the Japanese because Toyota may be forced to import cars and car-parts from Japan.

 

[werepossum]

Even if it's 2.2% and gets revised downward to 1.1%, it's still growth and a very positive sign. If these looming threats of health care reform and cap-and-tax get settled, we should see some strength coming back into the economy. Even if those turn out bad for business, at least businesses will know what they face and can plan accordingly, and at worst those industries favored by government can hire and grow. This uncertainty is what is holding up construction and hiring.

 

[WhipperSnapper]

The numbers were probably fudged a bit. When you consider that the population keeps growing and inflation is around 4% that does not mean squat. I kind of wonder how careful these figures are prepared. This could reflect a shift in vehicle production on the USA side and a reduction on the Japanese and foreigh vehicle production. With this new recall of japanese cars you may some shifts in preference.

It will be interesting to see what kind of changes in population are indicated after the Census results are in.

The U.S. gained about 32.7 million people in the 10 years between 1990 and 2000, according to Census data, I think. So we will have probably packed on about 35 million people between 2000 and 2010.

Anyway, the economy needs to create thousands of net new jobs, perhaps 150,000 net new jobs, every month not in order to increase the amount of jobs relative to population but merely to keep pace with population growth. So even if, as a result of the alleged GDP growth, the nation begins adding 50,000 net new jobs every month, it will still, in actuality, be a loss of about 100,000 jobs relative to population growth. (The media is either unaware of that or doesn't want to talk about it.)

 

[IceBergSLiM]

somebody is cooking the books.

 

[woolfe9999]

somebody is cooking the books.

And you know this how? What is the true and real GDP stat?

- wolf

 

[Patranus]

While this is a good sign, I will wait for the "revised" numbers to come out.

 

[dullard]

The last 2 times they came out with estimates, they were revised down ultimately. I'll wait for the revisions.

The last time it went from an initial estimate of +3.5% to +2.2%.

The first revision came in. GDP is now estimated to have grown 5.9% (revised up).

 

[sunzt]

The increase in real GDP in the fourth quarter primarily reflected positive contributions from private inventory investment, exports, personal consumption expenditures (PCE), and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

Good news ^

 

[Throckmorton]

It's good growth but GDP growth is also based on government expenditures which have been through the roof bought on deficits.

Uh that's right. It's called stimulus.