Ignoramus tonto, Check this out on MISLEADING GDP NUMBERS: By John's reckoning(economist) "a second-quarter year-to-year CONTRACTION of 2.9% would have been more in line with underlying fundamentals, past methodologies and the ongoing recession."
He suggests that a more telling picture of the economy's progress or lack of it is the alternative to GDP, known as gross domestic income, or GDI. It's a rough equivalent of GDP but measures the nation's income instead of production.
According to John, after adjusting for inflation, GDI in the June quarter weighed in at an anemic 0.5%, atop negative growth in the preceding two quarters -- which, as it happens, meets the popular definition of a recession.
Friday's disclosure that personal income in July suffered its biggest decline in three years doesn't exactly portend a rebound in the third quarter, and certainly didn't come as a big surprise to John, who sees the outlook for the economy remaining glum, with no early end to the banks' solvency crisis, as he terms it, nor the inflationary recession.
THE ASTUTE ECONOMY-WATCHER for Merrill Lynch, David Rosenberg, also strongly advises digesting the suspect GDP report with a "very large grain of salt." Among other things, he casts a skeptical eye on how the report treats the decline in corporate profits. (We won't keep you in suspense: The answer is: "gingerly.")
More specifically, he notes, "national-account corporate profits declined at a 9.2% rate in the second quarter." For domestic industries, he goes on, profits are down 14.4% year over year.
But according to the GDP report, domestic nonfinancial profits fell at a much sharper 22% annual rate. The reason the drop in total corporate earnings was limited to 9.2% was that, David relates, profits in the financial sector, so claims the report, surged -- get this -- at a 27% annual rate.
His wonderfully eloquent comment:
"Are you kidding me?" (Barrons) >>>>>>>> Them Bushies will try a number of tricks to make things look not so horrible till' November... |
