Wikinvest Wire

Gremlins under the GDP hood

Friday, October 30, 2009

From a report at MarketWatch, here's a good run-down by Steve Ricchiuto on how yesterday's GDP number was not quite as good as the headline number implied.

Like a few other "glass half empty" types (including yours truly), it's not too difficult for Ricchiuto to take out a few of the obvious one-off factors during the third quarter to reveal a much smaller number right around zero.

Of course, by the looks of things in Washington, there is good reason to think that what was a one-off event in mid-2009 might just be "business as usual" in 2010. The U.S. economy may need permanent stimulus.


Anonymous said...

Video isn't working for me. Any suggestions?

Tim said...

Dunno. Works fine for me under Firefox. You might want to go to the MarketWatch site - see link above.

The Real Deal said...

Of course it's as bad as the pessimists fear. Virtually all of the 3.5% growth comes from gov stimulus. And since gov already has NO money ($1.4T budget deficit), the growth came from money borrowed and which must be repaid with interest.

Just dig the debt hole deeper and call it growth.

Let's call a spade a spade: US has created for itself its version of Japan Lost Decade. I call it the American Loss Generation. Because, unlike Japan of the time (huge national savings, huge export industry) America has none of these. But it still has, to a diminished degree, the world's major reserve currency. Therefore there can only be one scenario - the currency will be devalued to pay down the huge debt. That will happen, but the price will be the lost of major reserve currency status for a generation. The Lost Generation.

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