seeing how much you appreciate denninger's take, i thought i would post this to you <g>
market-ticker.org
Friday, July 30. 2010
Posted by Karl Denninger in Macro Factors at 08:55
GDP Report: Liar Liar Pants On Fire
"Here it comes"......
LiesMan on CNBS is spooging himself with "wow"s.
Well, the futures disagree. And so do I.
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.4 percent in the second quarter of 2010, (that is, from the first quarter to the second quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 3.7 percent.
Well, so they say. That's first estimate. Remember that BEA's average "overstatement" of late seems to be running in the 20-30% range .vs. reality when the finals are in. So if we apply that sort of discount, we're well under 2.0, which will be admitted once all is said and done (and you've forgotten about the orgasmic response of the CNBS pump monkey clowns.)
Final sales of computers added 0.04 percentage point to the second-quarter change in real GDP after adding 0.10 percentage point to the first-quarter change. Motor vehicle output subtracted 0.01 percentage point from the second-quarter change in real GDP after adding 0.74 percentage point to the first-quarter change.
And again, .vs. the spooging that CNBS is doing right now about "Cars", the report says that motor vehicle output SUBTRACTED from GDP this quarter.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 0.1 percent in the second quarter, compared with an increase of 2.1 percent in the first. Excluding food and energy prices, the price index for gross domestic purchases increased 0.9 percent in the second quarter, compared with an increase of 1.6 percent in the first.
Pay more, have less. That'll work out great, right?
Real personal consumption expenditures increased 1.6 percent in the second quarter, compared with an increase of 1.9 percent in the first. Durable goods increased 7.5 percent, compared with an increase of 8.8 percent. Nondurable goods increased 1.6 percent, compared with an increase of 4.2 percent. Services increased 0.8 percent, compared with an increase of 0.1 percent.
How the hell is that possible with unemployment up around 10%? Oh wait, I found it.
Real federal government consumption expenditures and gross investment increased 9.2 percent in the second quarter, compared with an increase of 1.8 percent in the first. National defense increased 7.4 percent, compared with an increase of 0.4 percent. Nondefense increased 13.0 percent, compared with an increase of 5.0 percent. Real state and local government consumption expenditures and gross investment increased 1.3 percent, in contrast to a decrease of 3.8 percent.
Ah, so the Federal Government, despite claims by the Obama Administration that "deficits will come down" and similar lies, in fact dramatically increased non-defense spending.
Further, States and local governments, even though they have no money, increased spending too. Yes, that pretty green sky is an approaching tornado, and it's labeled "state and local insolvencies."
The change in real private inventories added 1.05 percentage points to the second-quarter change in real GDP after adding 2.64 percentage points to the first-quarter change. Private businesses increased inventories $75.7 billion in the second quarter, following an increase of $44.1 billion in the first quarter and a decrease of $36.7 billion in the fourth.
Oh, so fairly close to half of the GDP "increase" was in fact due to inventory build. Guess what happens to you when you build inventories that you later can't sell? Hint: The first letter is "B".
The personal saving rate -- saving as a percentage of disposable personal income -- was 6.2 percent in the second quarter, compared with 5.5 percent in the first.
That's a load of crap. BEA calls "personal savings" the mathematical forumula "Income - spending = savings." Uh huh. Paying off your credit card is "savings", according to the BEA.
Then we have revisions.
For 2006-2009, we now have a decrease net-net, as opposed to being flat.
All three years of the revision period were revised down. Again, if a mistake or inaccuracy (as opposed to intentional falsehood) is responsible for errors, one would expect them to be normally distributed - that is, some would be positive, some negative. This is obviously not the case.
Is there any good news in the report? Well, yes - there was a material uptick in non-residential fixed investment, centered around equipment and software. How much of this is a normal replacement cycle (deferred last year) and how much signifies real expansion is an open question and one not easily answered. However, I wouldn't call this particularly "robust", despite the pump monkey characterization this morning in the media.
The drops in some of the previously-published numbers were, however, simply stunning. For example, PCE (personal consumption) was previously reported for Q1/2010 as 2.13. The revision is 1.33, a thirty percent downward revision. That's not an error, it was a falsehood.
Worse was the services false report. The previous reported number for Q1/2010 was 0.69. Revised was 0.03, a downward revision of ninety-five percent.
The services revision backward was truly sickening - the entirety of 2009 was negative with the exception of the fourth quarter, where all but the first was previously reported positive, and the changes were ridiculous. First quarter was revised down from -0.13% to -0.75%, second from +0.09% to -0.79%, and so on. Again, that's not an error, it's a lie.
Needless to say when I get all my graph source data updated, it's going to look worse than it did - including my "government ponzi support" graph, one of my favorites.
The futures are diving on the report, as well they should. Not because it's bad - but because the entirety of the 2009 data set was a bald-faced lie. |
