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Why the economy's growth may be overrated.
Posted on 8/5/14 at 9:42 am
Posted on 8/5/14 at 9:42 am
LINK
Don't be surprised when 2Q revises downward.
quote:
Second-quarter growth numbers were strong largely because of an unusual expansion in inventories. But that doesn’t reflect actual growth in the economy, because inventory growth means companies are just replenishing stockpiles. Another component of GDP that more closely reflects actual spending is "real final sales" of things like cars, computers and services, which grew by just 2.3%. “What that’s telling you is, we’re not growing at 4% but probably closer to 2%,” Rosenberg said in an interview.
Don't be surprised when 2Q revises downward.
4
Posted on 8/5/14 at 9:59 am to AUin02
quote:
Don't be surprised when 2Q revises downward.
Don't worry, nobody will be surprised by that.
Posted on 8/5/14 at 10:00 am to AUin02
A lot of the GDP appears to be inventory. Though I would consider the following an adequate analysis.
This post was edited on 8/5/14 at 10:02 am
Posted on 8/5/14 at 10:00 am to constant cough
Nobody believes what the Gubment says.....moving along now.
Posted on 8/5/14 at 10:07 am to AUin02
An Obama economic Axiom: The economy will *grow* directly related to the degree that QE does. With the proper lag time, for effect.
As they shut down QE...it'll slow. UNLESS the "boot on the neck" of the Energy sector is removed. Cheap energy is the basis for economic growth.
Obama's plan/vision is for a "sustainable economy". I.e., a much smaller one, wherein the Government takes what's left of that shrinking pie and spreads it around. The new 'norm'. We'll find out if it flies.
As they shut down QE...it'll slow. UNLESS the "boot on the neck" of the Energy sector is removed. Cheap energy is the basis for economic growth.
Obama's plan/vision is for a "sustainable economy". I.e., a much smaller one, wherein the Government takes what's left of that shrinking pie and spreads it around. The new 'norm'. We'll find out if it flies.
Posted on 8/5/14 at 10:14 am to AUin02
quote:
Don't be surprised when 2Q revises downward.
well it very well may be, almost always the GDP print is revised.
But let's keep in mind, inventory building is STILL economic growth. Those people that built shite to fill in the inventory??????? yep, it had to be built and processed, which means economic activity was happening.
Oh, and businesses aren't stupid, if they have too much inventory, they will stop buying stuff and sell their current inventory.
This happens every year, inventory builds in Q2/Q3 to be moved in Q4.
Posted on 8/5/14 at 10:31 am to Hawkeye95
quote:
As they shut down QE...it'll slow. UNLESS the "boot on the neck" of the Energy sector is removed. Cheap energy is the basis for economic growth.
a
+1. Look at the 80s and 90s. Cheap energy was a constant. When energy becomes expensive, growth is more difficult.
Posted on 8/5/14 at 10:40 am to Hawkeye95
quote:
Oh, and businesses aren't stupid, if they have too much inventory, they will stop buying stuff and sell their current inventory.
https://en.wikipedia.org/wiki/Channel_stuffing
See: GM
This post was edited on 8/5/14 at 10:41 am
Posted on 8/5/14 at 11:33 am to Hawkeye95
quote:No.
But let's keep in mind, inventory building is STILL economic growth.
quote:Indeed. It's cyclical. It's also why there is a seasonally adjusted product.
This happens every year, inventory builds in Q2/Q3 to be moved in Q4.
Posted on 8/5/14 at 11:42 am to Hawkeye95
Building up inventory is all fine and dandy, provided you can actually MOVE the product. Building up inventory into a slow down is a good way to find yourself writing down losses.
If sales lag inventories, which they are, companies could be headed for a bad time.
If sales lag inventories, which they are, companies could be headed for a bad time.
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