Booms, Busts, and Recoveries Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Booms, Busts, and Recoveries

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: tradermike_1999 who started this subject	10/27/2000 11:11:18 AM
From: tradermike_1999	Read Replies (2) of 74559

Let's take a look inside today's GDP numbers. You don't get much analysis on CNBC so we'll have to do it ourselves. GDP rose at 2.7% in the third quarter, way off the second quarter rise of 5.6% and the lowest increase in 16 months, showing to all of us that the economic slowdown is real. 2.7% is way below the 2.9% percent consensus estimates on the part of economists so was a surprise. There are more surprises in the report. Consumer purchases increased 2.9% compared with 6.5% from last quarter. No wonder why retail stocks are getting crushed. What is interesting is that disposable income increased $81 billion and personal outlays increased $116 billion. Personal savings dropped to -$15.3 billion and is now -.2%, meaning that the average consume is awash in debt. What is interesting, and came to a shock to the forecasts of economists, is that nonresidential(business) investment increased 6.9% in the third quarter compared with an increase of 14.6% in the second. This is a rapid slowdown. Economists were expecting a 10% rise. What does this mean? Fixed nonresidential investment made up .52% of third quarter GDP. This is a sharp drop. 1st quarter of 2000 was 2.68% and 2nd quarter was 1.93%. This third quarter number is the lowest number since the third quarter of 1998, the time of the Asian financial crisis. Investment spending by corporations and the government is the backbone of economic growth. This sharp drop off signals a rapid slowdown in the economy. One doesn't see this by just looking at the headline 2.7% growth in GDP on CNBC and the press wires. It would have been worse if it wasn't for he increase in consumer spending. However, consumer spending based upon a widening debt to savings ratio is unsustainable and will fall as business expansion continues to slow down. To put this in simple terms: the economic slowdown has only begun. You can look at the complete numbers yourself at: cnnfn.cnn.com

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next