Quirky Quarter

After expanding at an annualized pace of 4.1% in Q3 and 2.4% in Q4, expect Q1 GDP to come in below 1.5% and that’s an improvement based on stronger March data. Q1 will be weak because of dismal weather, very weak inventory accumulation after large increases in Q3 and Q4 and an unexpected decline in…

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Good Growth!

The combination of November exports reaching an all-time high of $194.9 billion, the trade deficit narrowing to just $34.25 billion, its lowest level since 10/09, November’s factory orders rising 1.8% and October’s factory orders upward revision of 0.4%, and strong consumer spending is making me raise my Q4 GDP forecast to 3.1%. In Q3, GDP…

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Week of June 24th

Despite a huge downward revision of Q1 GDP growth from 2.4% to 1.8%, data for Q2 look decent. Durable goods orders look OK, home sales are good and despite sequestration and the payroll tax increase, consumer spending is holding up surprisingly well and savings rates actually edged up to 3.2% in May from 2.8% in…

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Less is Less

One reason the economy has been growing slowly is due to large productivity increases. GDP is 3% higher than before the bust, yet employment is down by 1.6%. Similarly, industrial production is 2% shy of its all-time high, yet capacity utilization is 4% below what it was on 12/07. As a result, spending on plant…

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Gimme Growth

While raising taxes and cutting spending can solve our debt problem, a better approach is to foster faster growth! If an increase of 1% in the economy’s growth rate were maintained over the next decade, the debt-to-GDP-ratio in 2023 would be reduced by 17 percentage points and our fiscal problems would be largely solved. And,…

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GDP = C+I+G+(X-M)

Q1 ’12 GDP was composed of personal consumption expenditures (C) totaling $11.0 trillion, private investment (I) of $2.0 trillion, government spending (G) of $3.0 trillion and net exports (E) of -$0.6 trillion. In Q2, G will be slightly lower, with E and I largely unchanged. So, overall GDP growth will be dependent on C. But…

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Costly Unemployment

As Congress considers–and eventually extends–a temporary payroll tax cut and extended unemployment benefits past 2/12, it should note that if both lapse GDP in ’12 would be reduced by 1%, when GDP growth is only 2%. They might also note that when workers lose their jobs when unemployment is below 6% they lose 1.4 years…

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Peak GDP Growth; Dismal!

On a 4-quarter trailing basis real GDP growth peaked at 3.2% in Q3 of last year, declined to 2.8% in Q4 and now stands at just 2.3% If that Q3 peak of 3.2% holds, it will be the be the lowest post-recession GDP peak ever recorded in the post WWII era. For purposes of comparison,…

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