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HomeConsumer Metrics Institute Projects 3rd Quarter GDP of -2%!! That’s Right -2%!!
Posted by Larry Doyle on June 2nd, 2010 8:25 AM |
Do you hear a grinding sound? Listen a little harder. That sound is the brakes being applied to the U.S. economy.
The current price action in commodities markets (as highlighted in my commentary yesterday, “Commodities Growling Like a Bear”) is very much reflective of this braking process. How do we measure the slowing? Where can we gain evidence? Let’s turn to Rick Davis’ fabulous work at Consumer Metrics Institute.
Recall that Rick has not only been way out in front with his calls on the growth of the U.S. economy, but also very accurate especially given that he is projecting GDP a full 4 months prior to its official release. (more…)
Consumer Metrics Institute: Double Dip Mild, but Prolonged
Posted by Larry Doyle on May 27th, 2010 6:54 AM |
Is the economy slipping into a double dip or has it already slipped and we just need to wait a few months for the mainstream media to hopefully report on it?
Clearly, our domestic and global economies are very fluid and subject to serious fluctuations given the massive amount of government intervention, but where can we go to receive a real-time look at the economy?
Let’s review the work of Sense on Cents Hall of Famer Rick Davis of Consumer Metrics Institute. Recall that Rick and his colleagues capture and review a wealth of consumer retail data across ten sectors of our economy on a ‘real time’ basis. While analysts are downstream assessing developments with production, Rick and team are way upstream assessing what the consumers are doing NOW. Current consumer activity is highly correlated with GDP out 17-18 weeks. Yes, we are getting a sneak peek at next quarter’s GDP now. Amazing stuff.
What does Rick see and what does he project? Let’s navigate. (more…)
1st Quarter GDP is Not a V-Shape
Posted by Larry Doyle on April 30th, 2010 9:14 AM |
The 1st quarter GDP figures were just released and registered a 3.2% gain. This statistic is slightly weaker than consensus expectations of 3.4%. What were the components? The Bureau of Economic Analysis provides insights:
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 3.2 percent in the first quarter of 2010, (that is, from the fourth quarter to the first quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 5.6 percent. (more…)
Debt/GDP: Ring of Fire
Posted by Larry Doyle on February 15th, 2010 11:45 AM |
All eyes within the markets and on the global financial landscape are currently fixated on Greece. Will it default? Will the EU bail out this island nation? If so, at what cost and on what terms? What is at the core of Greece’s fiscal nightmare? Excessive debt. So, what else is new?
Do not think that the excessive debt within Greece is the only nation on our global financial landscape facing this problem. What other nations do we need to keep on our radar? Bloomberg addresses this question in writing, Carney Says Investors Signal Stimulus ‘Limits’ as Deficits Grow:
Alongside Greece, Pacific Investment Management Co. identifies the U.S., Italy, France, Japan and the U.K. as economies sitting in a “ring of fire.” Each has debt above 90 percent of gross domestic product or the potential for it to rise there soon, slowing economic growth, Pimco said.
Deutsche Bank AG this month warned that the increased cost of insuring against debt defaults by peripheral European nations may be a “dress rehearsal” for the U.S. and U.K. Credit- default swaps on Greece’s debt rose to a record this month.
Living beyond one’s means is no recipe for future economic prosperity. While politicians may talk about the need for fiscal discipline, talk is cheap. Pork piled upon pork wrapped in more pork has stolen our children’s future. Washington may not appreciate the ring of fire, but Main Street is engulfed in it.
As we navigate our global economic landscape, we now need to make sure we pack fire retardant clothing in addition to other protective materials.
What a world.
LD
David Rosenberg: 4th Quarter GDP Likely Revised to 5%
Posted by Larry Doyle on February 11th, 2010 12:44 PM |
4th quarter 2009 GDP of 5.7% may have looked impressive on its face, but in peeling back the onion we learned that a large percentage of the growth was due to a slowing in inventory drawdowns rather than real growth. I highlighted as much on January 29th in writing,“Markets Fading the 4th Quarter GDP Report”:
The question for the economy, and in turn the markets, is to what degree the supposed growth embedded in the 4th quarter GDP is sustainable. To determine that, people need to appreciate the fact that this 5.7% GDP figure was driven to a large extent (60%) by a slowing in the drawdown of inventories. Are you scratching your head wondering what that means? Let’s just reduce it to the fact that drawing down inventories is not exactly a driver of growth at all.
What drives growth? Personal consumption. What drives personal consumption? Jobs.
Regrettably, we keep hearing from CFOs that they do not expect significant or meaningful job growth this year.
Over and above that, recent trade data will likely cause a revision lower in the aforementioned 4th quarter GDP. None other than our Sense on Cents Economic All-Star David Rosenberg projects that the increase in our trade deficit and overall weakness in wholesale trade will cause 4th quarter GDP to be revised to 5% from the initial 5.7% figure.
LD
Markets Fading the 4th Qtr GDP Report
Posted by Larry Doyle on January 29th, 2010 2:55 PM |
The 4th quarter GDP report came in this morning at a surprisingly strong 5.7%. However, like many other things in this Uncle Sam economy, not everything is as it appears. For that very reason, I wanted to wait to write about this report until I monitored the market’s reaction. Let’s navigate.
The question for the economy, and in turn the markets, is to what degree the supposed growth embedded in the 4th quarter GDP is sustainable. To determine that, people need to appreciate the fact that this 5.7% GDP figure was driven to a large extent (60%) by a slowing in the drawdown of inventories. Are you scratching your head wondering what that means? Let’s just reduce it to the fact that drawing down inventories is not exactly a driver of growth at all. (more…)
