GDP is . . . 0.6%
I will be out of pocket when GDP gets released, so feel free to go to the official BEA release; use the comments below to update/discuss the actual GDP data points.
A few things to look for beyond the actual number: Corporate profits, PCE, and seasonal adjustments.
~~~
UPDATE: April 30, 2008 9:47am
If we ignore the real (inflation adjusted) factor, as we delve deeper into the data, we see that Q1 spending (personal consumption expenditures) rose just 1.0% versus 2.3% in Q4. This matches Q2 2001's gains.
How did the rest of the numbers look?
GDP increased 3.2% to an annualized $14.19 trillion (in current dollars);
Gross private domestic investment was down -0.7%;
Business fixed investment: -2.5%.
Residential investment data actually accelerated downwards; the number -26.7% was the biggest drop since 1981. (who keeps calling those Real Estate bottoms?)
Purchases of durable goods fell 6.1%
Q1 non-durables spending dropped 1.3%.
Business spending fell by 2.5%.
Investment in structures went down 6.2%.
Equipment and software outlays decreased 0.7%.
The Final sales of domestic product (GDP less change in private inventories) fell 0.2%; final domestic sales (gross domestic product, excluding additions to stocks and international trade) dropped 0.4%. THIS WAS THE FIRST DECLINE SINCE THE 1991 RECESSION.
A few positives: First-quarter spending rose 1.0%, Services gained 3.4% and exports rose by 5.5%. While local governments are struggling, Uncle Sam remains profligate: Federal Government consumptions were +4.6% versus State and Local Govt: +0.5%.
Also helping to keep nominal GDP in the green: Inventory builds. They rose slightly for the quarter by $1.8B, versus going down $18.3 billion in Q4. That contributed 0.81% to Q1 GDP, and without it, the Q would have been negative.
courtesy of Barron's Econoday
>
Previously:
GDP, Inflation & Recession
http://bigpicture.typepad.com/comments/2008/04/gdp-inflation-r.html
Source:
GROSS DOMESTIC PRODUCT: FIRST QUARTER 2008
GDP, April 30, 2008
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
Wednesday, April 30, 2008 | 08:29 AM | Permalink
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Did I read that right? GDP increased at 0.6% again this quarter(same as 4th quarter of 2007). Interesting stuff. How far back do the revise? Is the BEA Immune from political pressure?
Posted by: Joe Klein's conscience | Apr 30, 2008 8:39:24 AM
Great!
Since the economy has not fallen off a cliff and official statistics imply that better times are ahead, the FOMC has permission to raise rates today. The economy can support using interest rates to combat inflation in asset prices and commodities that are usually ignored in inflation calculations.
Posted by: cinefoz | Apr 30, 2008 8:45:32 AM
Great Debate this morning with Westbury, Santelli, and.... well liesman was there.
I had a huge chuckle when Westbury was insulted when Liesman called him a 2 handed economist.
Great stuff.... I'll be psyched to see the clip later.
Posted by: Eric Davis | Apr 30, 2008 8:54:00 AM
Of course the GDP was going to be positive, if our inflation statistics aren't even accurate, how can we report the right real GDP numbers?
Posted by: Dave | Apr 30, 2008 9:01:40 AM
Well,
this was largely expected. It is not that difficult to produce a positive GDP. Watch out when the fiscal stimulus comes in. An increase of discretionary spending by $20bn in a quarter(which is 0.14% of GDP) produces a quarterly annualized GDP growth of 2.2%!!!
This report, combined with the too low inflation rate used (2.6% YoY vs 4.0% headline CPI - which we all know is too low itself) means that this is the second recessionary quarter after Q4-07 (at least).
For Wall Street there is no recession as long as nominal GDP is not negative and they can sell overseas to lock high USD profits. It is not growth über alles, it is corporate / banks growth über alles. You need some real discontent of the masses to change this system...
Posted by: Ivo | Apr 30, 2008 9:06:55 AM
would not trust a broken penny to this government, what a bunch of lairs!!!
Posted by: sergtat | Apr 30, 2008 9:09:44 AM
"You need some real discontent of the masses to change this system..."
Ivo, the "masses" have been living large on borrowed funds for many many years. Now we have to repay our debts. That means we must export more and import less and to do this we will need to have a weaker $.
It is not a grand conspiracy of the corporate and financial world. Rather it is the unwinding of what was a very imbalanced economy. One where the masses spent more than they earned and one where the USA imported far more than it exported.
The next couple of years are going to feel like a recession to the "masses", aka you and me, because we collectively have been living beyond our means for a very long time.
Posted by: bsneath | Apr 30, 2008 9:19:55 AM
The growth (if you consider .6@ growth )resulted from inventory buildups. Anyone been by a car dealer lately? The lots are full. Most companies have reported that business in March declined dramatically, so we are setting up for a putrid second quarter. Of course by the time the election rolls around, we will not have had the third qtr number and there will be no official recession.
Posted by: larster | Apr 30, 2008 9:38:51 AM
"GDP is . . ."
. . . unadulterated bullshit.
Posted by: Marcus Aurelius | Apr 30, 2008 9:54:27 AM
"It is not a grand conspiracy of the corporate and financial world. Rather it is the unwinding of what was a very imbalanced economy. One where the masses spent more than they earned."
And pray tell how the masses were able to do that? Have we seen bankers and financiers beg the masses NOT to use credit? When was the last time the credit card industry has shown restraint in their marketing practices?
Posted by: Francois | Apr 30, 2008 9:54:41 AM
Even if you believe the government's tortured statistics, you can't claim that GDP per person, which is the real measure of wealth that matters, is positive.
It's simple math--if the population is growing better than .6%, which it is (about 1.5%, give or take) then at .6%, we are all getting poorer.
It's also why you need be careful when, in aggregate, Japan's economic performance appears dismal over the last few years. Japan has a declining population. Its relatively flat aggregate performance actually yields a nice 2-3% growth in per capita GDP.
Since people are what matter, per capita GDP should be our metric.
Japan is getting a bit richer, or at least not getting poorer, per capita. The US, on the other hand, is getting poorer.
Posted by: Stephen Keith | Apr 30, 2008 9:55:42 AM
How come housing services is one of the main positive contributors of the services component at of PCE ? I'm writing from Europe so what exactly do you call housing services ? Rent management, refurbishments ? mortgages also ?
Posted by: FMP | Apr 30, 2008 10:01:11 AM
The answer to the question of whether or not the U.S. is in a recession is: maybe yes, maybe no. What's for certain is that using the techniques we've developed, the U.S. is certainly skirting the edge of recession.
Posted by: Ironman | Apr 30, 2008 10:02:57 AM
Can someone explain to me how Exports are going to drive the economy out of its malaise when oil (consistently rising) is required to transport the goods?
Posted by: Cos | Apr 30, 2008 10:21:52 AM
GDP will stay positive as long as Capital One and JPM continue to allow 0% balance transfers and keep mailing out those credit card advance checks-0% interest until the election-errr Novemeber. Wasn't that the quid pro quo? We are off the HELOCS but we still have credit cards whoooooohoooooo!
Watch consumer credit, it explains a lot.
Posted by: Rich Shinnick | Apr 30, 2008 10:30:17 AM
You'll be "out of pocket"?
Dude, you've been watching too much "Wire".
You feel me?
Posted by: ari5000 | Apr 30, 2008 10:58:53 AM
FMP,
See the BEA NIPA primer (page 5), regarding the imputation of housing services.
Posted by: Estragon | Apr 30, 2008 11:31:13 AM
And pray tell how the masses were able to do that? Have we seen bankers and financiers beg the masses NOT to use credit? When was the last time the credit card industry has shown restraint in their marketing practices?
Posted by: Francois | Apr 30, 2008 9:54:41 AM
Me thinks the bankers and financiers are getting their just rewards as we blog!
Posted by: bsneath | Apr 30, 2008 12:06:03 PM
Joe Klein's conscience wrote:
Did I read that right? GDP increased at 0.6% again this quarter(same as 4th quarter of 2007). Interesting stuff. How far back do the revise? Is the BEA Immune from political pressure?
The BEA may revise the 2008Q1 GDP figures they just release twice more, before making them "final." However, it's not uncommon for the BEA to revisit the figures months or years later to make substantial revisions.
As for the BEA's immunity from political pressure (or rather, influence), there is evidence that suggests that they are not, with the prime example being the presidential election year of 2000. Here, the BEA initially reported strong economic growth, even though the economy had begun sliding strongly into recession with the bursting of the Dot Com stock market bubble. The BEA made massive downward revisions in two of 2000's four quarters years after their original figures were released.
Posted by: Ironman | Apr 30, 2008 12:28:56 PM
Thanks for the info ari5000.....I get it now... it's still quite puzzling though
This means that rents are moving up which is suprising to me. Could it be a substitution effect from house-owning to rental ? Meaning the rise in this component of PCE is being compensated by the tragic performance residencial private domestic investment ?
Thanks,
Francisco
Posted by: FMP | Apr 30, 2008 1:21:12 PM
Not a chance in hell that inflation for the quarter was that low. Zippo... We all know it too.
Posted by: stuart | Apr 30, 2008 4:08:10 PM
Barry, this divergence between deflator and CPI is really interesting indeed. If you look up a spread between CPI and Deflator in your Bloomberg, then you will see, that in the past even more dramatic divergences occured, and most of them in a highly inflationary enviroment or recessions. Clearly it's a sign that the goverment is playing with the numbers.
Posted by: flipper | May 1, 2008 3:14:19 AM
