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Technology Stocks : Semi Equipment Analysis

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To: marc ultra who wrote (56141)	5/2/2012 6:15:28 PM
From: FJB	2 Recommendations Read Replies (1) of 95536

The economy appears to have had zero growth with an appropriate deflater in the first quarter. ------------------------------------------------------------------------------------------------------------------------------------- Once again the BEA has used "deflaters" that will strain the credibility of the public, especially if they buy gasoline. To correct the "nominal" data into "real" numbers the BEA assumed that the annualized inflation rate during 1Q-2012 was 1.54%. As a reminder, lower "deflaters" cause the reported "real" growth rates to increase -- and once again very low seasonally adjusted BEA inflation "deflaters" have been the headline number's best friend. If the raw "nominal" numbers were instead "deflated" by using the seasonally corrected CPI-U calculated by the Bureau of Labor Statistics (BLS) for the same time period, nearly the entire headline growth rate vanishes -- and the resulting growth rate would have been a minuscule 0.08% with "real final sales" contracting. And real per capita disposable income actually shrank during the quarter -- even using the BEA's optimistic "deflaters." Real-world households likely felt the pinch even more. Among the notable items in the report: -- The contribution to the annualized growth rate for consumer expenditures for goods improved to 1.47%, up 0.18% from the 1.29% for the fourth quarter of 2011. Although this number remains modest by "recovery" standards, it has been trending upward for the past several quarters. -- The contribution made by consumer services also improved (to 0.57%), but it also remains anemic by "recovery" standards. -- The growth rate contribution from private fixed investments dropped to 0.18% -- losing over a half-percent relative to the fourth quarter of 2011 and 1.34% from the third quarter of 2011. -- The contribution from inventories (0.59% annualized) dropped significantly from the 1.81% reported for 4Q-2011. This drop in inventory building was inevitable, although it still represents nearly a quarter of the headline number. -- The reported drag on GDP growth from contracting expenditures by governments moderated somewhat at -0.60% (about a quarter of a percent less than the -0.84% reported for 4Q2011). -- The annualized contribution to the growth rate from exports rose to 0.73% (from 0.37% in the prior quarter). -- Imports are now removing -0.74% from the growth rate of the overall economy, slightly worse than the -0.63% recorded during 4Q2011. -- The annualized growth rate of "real final sales of domestic product" rose to 1.61%, but it is still a 1.55% below the +3.16% reported for the third quarter of 2011. If this number is accepted at face value (and not as a consequence of "deflaters" playing havoc with inventory valuations) it still indicates a much weaker economy than is conveyed in the headline number. -- Real per-capita disposable income shrank at an annualized -0.27% rate during the quarter (from $32,699 per capita to $32,677 per capita) -- and it remains lower than it was 5 quarters ago. consumerindexes.com

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