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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.
3 comments:
Video isn't working for me. Any suggestions?
Dunno. Works fine for me under Firefox. You might want to go to the MarketWatch site - see link above.
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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