Review 1st Qtr 2013 GDP: The “Final” Answer
Posted by Larry Doyle on April 26, 2013 8:34 AM |
The 1st quarter 2013 GDP release indicating growth of 2.5% might not be as strong as expected but it is certainly a lot better than the anemic .4% increase registered in Q4/2012, right?
On the surface, yes, you would be correct. 2.5 is definitely a larger number than .4.
If we were to go by such simple measures, then we can paint a whole host of beautiful landscapes as we navigate our way deeper into the depths of economic hell. Let’s not be so easily hoodwinked, but sort through the noise in this report to reveal what I believe is the critical component of any GDP report. And what is that?
Real final sales.
How are we doing on that front? Sifting through the inventory adjustments and assorted other noise in the Bureau of Economic Analysis report, we find tucked way down the bottom of the report the fact that:
Real final sales of domestic product — GDP less change in private inventories — increased 1.5 percent in the first quarter, compared with an increase of 1.9 percent in the fourth.
Pardon the verbiage, but that number and that trend “sucks.”
I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.