Two problems with that report:
1) It's an ADVANCE ESTIMATE, not and ACTUAL NUMBER for GDP. One thing that has been very consistent with advance estimates from the government is that they are different from the final estimate. We won't know what real GDP was until the final estimate comes out.
2) To jack up consumer spending, consumers have been on another borrowing binge. Their savings rate has gone down. Uh oh. Looks like our government has been enticing consumers to spend with all the low rates they've been engineering. That means consumers are leveraging up again, which puts us back onto the unsustainable path that lead to 2008. Here we go again.
GDP: 2.5% "Meets Expectations"
Here we go.....
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 2.5 percent in the third quarter of 2011 (that is, from the second quarter to the third quarter) according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.3 percent.
Let's have a peek inside!
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 2.0 percent in the third quarter, compared with an increase of 3.3 percent in the second. Excluding food and energy prices, the price index for gross domestic purchases increased 1.8 percent in the third quarter, compared with an increase of 2.7 percent in the second.
Real personal consumption expenditures increased 2.4 percent in the third quarter, compared with an increase of 0.7 percent in the second. Durable goods increased 4.1 percent, in contrast to a decrease of 5.3 percent. Nondurable goods increased 0.2 percent, the same increase as in the second. Services increased 3.0 percent, compared with an increase of 1.9 percent.
This is not what you want to see - a shift toward more service consumption. Durables is good for what it is, but most of it was probably autos, given recent numbers, and we'll see if that's maintainable. Many people believe it is. I do not.
Real nonresidential fixed investment increased 16.3 percent in the third quarter, compared with an increase of 10.3 percent in the second. Nonresidential structures increased 13.3 percent, compared with an increase of 22.6 percent. Equipment and software increased 17.4 percent, compared with an increase of 6.2 percent. Real residential fixed investment increased 2.4 percent, compared with an increase of 4.2 percent.
Hmmm... non-residential building? These are big numbers; are they overly optimistic? I believe so, and that could be an ugly snapback if so. If not, this is going to be quite some bounce - but I'm not buying it just as I didn't last quarter. Those sorts of increases areextraordinary in the non-residential side, and should have reflected in employment. They haven't, which leads me not to believe them. This is two quarters in a row and I simply refuse to believe that you can put these numbers up and not have it show up in big hiring.
Real exports of goods and services increased 4.0 percent in the third quarter, compared with an increase of 3.6 percent in the second. Real imports of goods and services increased 1.9 percent, compared with an increase of 1.4 percent.
How come I don't see this improvement in the trade balance figures? (Sigh....)
Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 2.2 percent in the third quarter, compared with an increase of 1.0 percent in the second.
Ok, so we have a 2.2% increase in spending. How's income?
Current-dollar personal income increased $29.5 billion (0.9 percent) in the third quarter, compared with an increase of $145.7 billion (4.6 percent) in the second.
That's bad. More leverage at the consumer level? Great. That's just what we need - NOT. But it is what the rest of the numbers imply, which goes along with the Z1 figures - leverage is increasing again in the consumer sector despite the claims of people that "the consumer is de-leveraging."
Bluntly: NO THEY'RE NOT!
Disposable personal income increased $17.0 billion (0.6 percent) in the third quarter, compared with an increase of $110.5 billion (3.9 percent) in the second. Real disposable personal income decreased 1.7 percent, in contrast to an increase of 0.6 percent.
There's Johnny!
Personal outlays increased $133.1 billion (4.9 percent) in the third quarter, compared with an increase of $100.5 billion (3.7 percent) in the second. Personal saving -- disposable personal income less personal outlays -- was $472.7 billion in the third quarter, compared with $588.9 billion in the second. The personal saving rate -- saving as a percentage of disposable personal income -- was 4.1 percent in the third quarter, compared with 5.1 percent in the second.
And there's your explanation.
Sigh..... If this is the best we can do while the consumer is larding up the balance sheet again we have learned nothing and the euphoria may last a while, but we're headed right into being in big trouble - again - having actually resolved nothing. |
