Friday, January 29, 2010

The GDP Pop

As usual, paying attention to the 'internals' is worthwhile.

Ticker notes that the 'Personal Consumption Expenditures' portion of GDP happens to include Gummint transfer-payments (like, e.g., unemployment compensation) and is therefore a bit foggy.

That caution is reinforced when we note that 'personal income increased $119Bn in 4Q, but current taxes decreased $11+Bn (same quarter.)

The reported increase is certainly a positive. But it may be less positive than Teh Won would like.
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1 comment:

J. Strupp said...

Unfortunately, 3.5% of that GDP growth number was the ongoing "inventory bounce".

Only a mere 2.2% of that growth was actual consumption, which is a aweful number coming out of a recession (which we aren't).

...the demand crisis continues.

Now factor in the potential for early Fed. tightening and our dear leader's appalling spending "freeze" and we've set the table for the mother of all jobless recoveries with lukewarm GDP growth and a major shift in the political climate come November. This should open the door for politicos on the other side of the aisle to promote even more contractionary policies in the name of fiscal discipline.

Welcome to the lost decade.

1/29/2010 1:05 PM

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