The December estimates put into the GDP are about as solid as a Jello mold.
Worse, according to economist John Williams, 3.44 percentage points of the annualized growth in the fourth quarter -- more than the total 3.2 percent reported -- came from a sudden, inexplicable decline in imports.
Without the reduction in imports GDP would have been down in the fourth quarter and we'd be hearing talk right now -- again -- about a possible double-dip recession!
The Commerce Dept. also attributed a lot of the gain in fourth quarter GDP to retail spending.
But we already know -- from a column I did during the holiday shopping season -- that much of the sales increase in December wasn't coming from a sudden burst in consumerism, but instead from rising prices on things like energy.
That isn't growth; it is inflation. And inflation is bad.
2 comments:
Had a long discussion with Brian Wesbury on this. He is of the opinion, and convinced me, that the 4th quarter numbers are skewed because everything sold off retailers shelves faster than merchants projected.
Thus, you couldn't bring in enough products to build inventory fast enough to capture Christmas sales.
I also think high airfreight (high fuel) charges squashed some last minute Christmas imports.
Who knows, we may just start making things in the USA again.
JBP
slow food, slow manufacturing:)
well, who knows.
we need a better regulatory climate though.
and some hope there's life after Obama
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