I love government reports. I love the MSM spin. I love to poke holes in the government/MSM storyline of recovery. Here is a link to the GDP table:
http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1
Here are my observations:
- GDP rose by $190 billion in the 3rd quarter, with $104 billion being produced by consumer spending. Isn’t that precious? I wonder what consumers spent that money on to produce that $104 billion increase in GDP?
- The statistic that reveals part of the answer is $47 billion of this increase was in personal consumption of services. Guess what is considered a service? College tuition. So what we have is the Federal government doling out BILLIONS in taxpayer backed loans to dumbasses who enroll at the University of Phoenix and thousands of other diploma mills to get worthless degrees and no jobs if they even graduate. THIS IS CONSIDERED AN INCREASE IN GDP. It’s beyond laughable.
- Personal consumption of non-durable goods leapt by $41 billion. You know what is non-durable? That’s right – food and gasoline. The fact that you were paying 20% more to fill up your car in the 3rd quarter and the fact that bacon, corn, wheat, and soybeans are 20% to 30% more expensive to buy resulted in a jump in spending. THIS IS CONSIDERED AN INCREASE IN GDP. Joy to the world.
- The purchase of durable goods (cars, furniture, electronics, appliances) only went up $17 billion. Think about how pitiful that figure is when you consider that the Federal Government through Ally Financial is dishing out 0% six year car loans to anyone who can scratch an X on a loan document.
- Exports declined and Imports imploded. These figures confirm the true worldwide picture. The entire world, including the United States, is contracting. So even though the government won’t tell you, the worldwide recession is already underway.
- Lastly, remember all the talk about government belt tightening and states reducing spending. It’s complete and utter bullshit. The government sector increased their spending by $38 billion. And guess where our beloved bureaucrats spent it? Yep – 70% of the increase was for our war machine. I thought we were winding down our wars of choice. That was what Obama declared on TV earlier this week. It looks to me like we are preparing for more war, based on these figures.
Even the government, with their fake bullshit calculation of inflation, admits that Real GDP only went up by $68 billion in the 3rd quarter. That is 65% below the reported figure. In reality, we all know that inflation is not running at 2%. It is running above 5%. Using the true level of inflation, Real GDP is declining. For the truth, you can go to www.shadowstats.com.
So concludes my daily pin prick in the government/MSM bullshit balloon.
Administrator says:
Q3 GDP Estimate Beats Expectations As Government “Consumption” Soars
Submitted by Tyler Durden on 10/26/2012 08:42 -0400
Moments before this morning’s first look at the Q3 GDP print came out we tweeted the following:
zerohedge
@zerohedge GDP will not disappoint ahead of election
26 Oct 12 ReplyRetweetFavorite
Sure enough, the preliminary look at Q3 GDP just came out and “beat” expectations of a 1.8% print, with a 2.0% reading (or just in line with stall speed, a number which previously has been indicative of recessions). So far so good, but as with every other pre-election economic data point out of the government, one has to look behind the headline to get the true picture. And the details are, as expected, ugly. Because of the 2.02% annualized increase in GDP, over one third, or 0.71% (compared to a deduction of -0.14% in Q2, and 0.64% of the 0.71% came from defense spending), was contributed by “Government Consumption.” This was the biggest rise in government spending in 3 years, and only the first contribution by Uncle Sam to its own GDP print since Q2 2010. So in much the same way as the September jobs print soared courtesy of government employee hiring, this same government is now juicing its own numbers to make itself look better. The real question is what the second and third Q3 GDP revisions will show, which both come, luckily, after the election. Recall that Q2 GDP initially came out at 1.5%, then was revised to 1.7%, until finally coming to rest at 1.25%.
And in other news, Personal Consumption: the key driver for real economic growth, rose 2.0% in Q3, missing expectations of a 2.1% increase.
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26th October 2012 at 9:13 am
Eddie says:
Goebbels is smiling down from Heaven…
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26th October 2012 at 9:18 am
harry p. says:
Eddie,
“…from Heaven”???? Really?
me thinks its not heaven….
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26th October 2012 at 9:38 am
Administrator says:
Isn’t it fascinating that the Federal government went on the largest spending spree in 3 years just before an election. It must be a coincidence. Right?
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26th October 2012 at 10:00 am
Eddie says:
Just a figure of speech.
Which religious mythology does Eddie prefer?
(a) One in which Goebbls is allowed to repent on his deathbed and go home to Jesus.
or
(b) One in which Goebbls has been reborn as a dung beetle 67 times.
You guessed it, (b).
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26th October 2012 at 10:01 am
Administrator says:
More GDP created by Federal Gov’t easy money and withholding of foreclosures from the market.
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26th October 2012 at 10:05 am
Administrator says:
Spending by real businesses has collapsed to ZERO growth.
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26th October 2012 at 10:06 am
Administrator says:
This is the prelude to the huge food price increases coming in 2013.
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26th October 2012 at 10:07 am
Eddie says:
Looks pretty grim, doesn’t it.
Well, I guess as long as the stock market goes up, everything is A-Okay! (famous last words).
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26th October 2012 at 10:10 am
BUCKHED says:
We had a layoff here at work yesterday….10% reduction in force. I survived…thank God….doing a good job helped.
Cummins announced a layoff of 1,100…..when Cummin’s sneezes…my company gets a cold.
Things are going to get rough in 2013…no matter who is Pres .!
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26th October 2012 at 10:42 am
LLPOH Dopple says:
So the line “So concludes my daily pin prick in the government/MSM bullshit balloon.” was grossly exaggerated?
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26th October 2012 at 11:09 am
Stucky says:
What EXACTLY is GDP? Does anyone truly know? The same government that tells us that unemployment is under 8% and that there is virtually no inflation …… I’m supposed to believe their GDP bullshit?? That’s insane. I would bet not only my left nut, but my right one as well, that the governments GDP number is nothing but an accounting illusion.
Two interesting comments made by some Frenchie guy
He said, “Marry your cleaning person, and you will make GDP drop!”. Here is the first big criticism of GDP — that it excludes and/or significantly underestimates, many goods and services produced outside the official market economy.
He also said, “Burn Paris and you will make GDP grow!”. Here is the second big criticism of GDP — that it only includes positive values; destroy something, rebuild it, and GDP goes up. But actual economic well being is unchanged! This is nothing more than the “broken window” fallacy. In fact, that brilliant asshole Krugman said that what the USA should do is declare we’re being invaded from outer space, and all the money spent on armaments would boost GDP. Brilliant fuckwad, is he not?
Where the fuck did such ideas come from? A little googling, and Bingo! Keynesian economist Simon Kuznets designed GDP at the height of the New Deal era in 1934. He designed it to take into account consumption, investment AND government expenditure. So there’s your dirty little secret about GDP — it vastly overplays the importance of government spending. Government spends = economic growth. Bridge to nowhere? Growth!! Cancelled multi-billion dollar military contracts? Growth!! Stimulus spending? Growth!!
How fucking convenient this all is for the Keynesian. For 70 plus years we’ve been bullshitting ourselves with the biggest economic statistical lie of all time.
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26th October 2012 at 11:37 am
Administrator says:
Debt to GDP ratio of 102.4% and rising by the minute. The point of no return is 90%. Bye Bye
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26th October 2012 at 11:48 am
Administrator says:
Commentary on The Capital Markets Posted 2012-10-26 11:14
by Karl Denninger
3Q GDP — What It Appears?
From the BEA:
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 2.0 percent in the third quarter of 2012 (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.
The Bureau emphasized that the third-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see box below). The “second” estimate for the third quarter, based on more complete data, will be released on November 29, 2012.
The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), federal government spending, and residential fixed investment that were partly offset by negative contributions from exports, nonresidential fixed investment, and private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased.
The acceleration in real GDP in the third quarter primarily reflected an upturn in federal government spending, a downturn in imports, an acceleration in PCE, a smaller decrease in private inventory investment, an acceleration in residential fixed investment, and a smaller decrease in state and local government spending that were partly offset by downturns in exports and in nonresidential fixed investment.
Hmmm….
But there’s some really bad news in here folks if you’re looking beyond the headlines. Like this:
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.5 percent in the third quarter, compared with an increase of 0.7 percent in the second. Excluding food and energy prices, the price index for gross domestic purchases increased 1.3 percent in the third quarter, compared with an increase of 1.4 percent in the second.
and
Real federal government consumption expenditures and gross investment increased 9.6 percent in the third quarter, in contrast to a decrease of 0.2 percent in the second. National defense increased 13.0 percent, in contrast to a decrease of 0.2 percent. Nondefense increased 3.0 percent, in contrast to a decrease of 0.4 percent. Real state and local government consumption expenditures and gross investment decreased 0.1 percent, compared with a decrease of 1.0 percent.
So states and local governments held the line, but the government blew money like crazy.
Good? Well, not really, and here’s why — the Federal Government spent $1.2414 trillion .vs. $1.2107 last quarter, or an increase of $30.7 billion.
The problem is that non-residential investment actually fell and it is that investment that creates jobs.
This is a tepid report at best and Obama is doing his level damndest best to try to buy his way back into the White House with defense spending.
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26th October 2012 at 11:53 am
AWD says:
Obama and the criminal democrats once again using yours and my tax money to steal the election. How do they get away with it? Nobody believes the bullshit GDP or unemployment numbers anymore. The government has lost all credibility.
The few political ads I’ve seen around here, Obama is like a pariah. They are using him and Obamacare to wipe out democrats. Being associated with Obama is death sentence for democrats. So be it. We can’t take any more democrat rule, or else we’re sunk.
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26th October 2012 at 11:59 am
TeresaE says:
Responding to a Yahoo Finance news report yesterday (some moron saying we only have ONE “headwind” running against 2013 “recovery”), I remembered an old term I haven’t used in a while.
GIGO
ALL government reporting has turned into GIGO
Which is an IT acronym for Garbage In, Garbage Out.
With the lies, damned lies and statistics, it feels like we are being herded somewhere. I just hope that somewhere isn’t as nasty as I am imagining it to be.
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26th October 2012 at 12:52 pm
Administrator says:
A Closer Look GDP Data
By Barry Ritholtz – October 26th, 2012, 12:15PM
Adventures in confirmation bias: The GDP data this morning was a deep sigh of relief for those people who fear a recession may be coming.
I don’t have that sense of relief. Perhaps its my own bias, but the details of the GDP report reveal not an organic growth period in a healthy recovering economy, but rather a tepid post-credit crisis expansion highly dependent on government largesse and Federal Reserve accommodation.
It is about what we should expect: Below-trend growth, as the economy gradually heals, individual and bank balance sheets slowly improve, and the excesses of the prior cycle get wrung out of the system.
Consider the major factors within this GDP report:
-Residential construction rose 14.4%. Housing is a bright spot; with sales and prices increasing. However, this has been artificially goosed by the Fed’s ultra low rates and purchases MBS. Mortgage rates are at their lowest levels since WW2, and foreclosure abatements have created an appearance of reduced distress sales. So this portion of GDP is positive but artificial; it added about 0.3% to GDP.
-Defense Spending rose by 13% — this added 0.6% to GDP. This is not what we want driving GDP, but rather, Ii prefer to see private sector improvements.
-Business Spending remains soft. Ignore the nonsensical “Uncertainty” trope; if demand were there, businesses would add personnel and make CapEx investments as necessary. (idiotic rationalizations spoon fed to the gullible do not count as intelligent economic analysis to me — and that includes “uncertainty”).
-Slowing Imports (down 1.6%) took a few bips off of GDP.
-Midwestern Drought I do recognize that the probably whacked almost half a percentage point from overall GDP numbers (0.1% times 4Qs for an annualized 0.4%).
By my numbers, half of the GDP gains came from Fed/Uncle Sam. The slowdown in Europe and Asia are pressuring economic activity; the drought took away some of the gains, and without that, we should have seen some more strength.
Overall, this report suggests that we are not yet in recession, yet, but are barely above stall speed — more like a 1.5% GDP ex-government interventions and drought. The improvements we are seeing seem to be driven mostly by Fed and government intervention.
The key question, in light of the mediocre earnings season, is how long the propping up can continue.
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26th October 2012 at 1:56 pm
ecliptix543 says:
Admin – How about a running piece called “Bullshit Balloon” for such reports? I think it is a perfect descriptor of the clusterfucked nightmare of this alleged economy we’re told exists. A repostè to Bill Maher’s Dispatches from the Bubble, as it were.
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26th October 2012 at 10:05 pm