Montegue:
You should probably do better research before mistaking Q3 2008 Numbers for Q3 2009 Numbers.
http://www.bea.gov/newsreleases/nationa ... elease.htmQuote:
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 3.5 percent in the third quarter of 2009, (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 decreased 0.7 percent.
1. Real GDP is down.
2. The "advance" estimate has been off for the last 7 quarters in a row by more than generally accepted.
More importantly, you need to look at why they're making that claim:
Quote:
Real personal consumption expenditures increased 3.4 percent in the third quarter, in contrast to a decrease of 0.9 percent in the second. Durable goods increased 22.3 percent, in contrast to a decrease of 5.6 percent. The third-quarter increase largely reflected motor vehicle purchases under the Consumer Assistance to Recycle and Save Act of 2009 (popularly called, “Cash for Clunkers” Program). Nondurable goods increased 2.0 percent in the third quarter, in contrast to a decrease of 1.9 percent in the second. Services increased 1.2 percent, compared with an increase of 0.2 percent.
First, the durable goods increase isn't a real increase, because CARS isn't exactly a demand generating venture. Rather, it liquidated portions of stockpiled inventory that were diluting the asset positions of the various dealers and manufacturers that make cars. It looks good on paper, but is offset by the increased leverage position.
Second, if you go over the general indicators, consumption and spending are both lagging behind consumer level inflation. The cost of goods and services is rising faster than spending, which means growth in absolute dollars is meaningless. There's a reason they haven't re-chained the dollar yet: it was particularly weak vs. consumer spending in 2008. This means the numbers look better than they actually are.
Quote:
Real federal government consumption expenditures and gross investment increased 7.9 percent in the third quarter, compared with an increase of 11.4 percent in the second. National defense increased 8.4 percent, compared with an increase of 14.0 percent. Nondefense increased 6.8 percent, compared with an increase of 6.1 percent. Real state and local government consumption expenditures and gross investment decreased 1.1 percent, in contrast to an increase of 3.9 percent.
Third, government spending is through the roof at the federal level, substantiating the claims of over-leveraging the deficit and economy power of the government. More importantly, with the government accounting for at least 25% of GDP, that means it's responsible for the largest single contribution to growth per the BEA Numbers. That's totally unacceptable and economically invalid. Government spending does not introduce new wealth into the system: it drains wealth.
Finally, the money shot:
Quote:
Disposable personal income decreased $20.4 billion (0.7 percent) in the third quarter, in contrast to an increase of $138.2 billion (5.2 percent) in the second. Real disposable personal income decreased 3.4 percent, in contrast to an increase of 3.8 percent.
Personal outlays increased $148.2 billion (5.8 percent) in the third quarter, compared with an increase of $8.2 billion (0.3 percent) in the second. Personal saving -- disposable personal income less personal outlays -- was $364.6 billion in the third quarter, compared with $533.1 billion in the second. The personal saving rate -- saving as a percentage of disposable personal income -- was 3.3 percent in the third quarter, compared with 4.9 percent in the second.
The Personal Savings Rate dropped. While this indicates some degree of capital mobility, it's totally dominated by the increase in leveraged debt.
There is no growth.
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