Global Economic Intersection
Advertisement
  • Home
    • 카지노사이트
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
    • 카지노사이트
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

Real Final Sales Drive GDP to Downside

admin by admin
May 29, 2015
in Uncategorized
0
0
SHARES
13
VIEWS
Share on FacebookShare on Twitter

by Rick Davis, Consumer Metrics Institute

In their second estimate of the US GDP for the first quarter of 2015, the Bureau of Economic Analysis (BEA) reported that the economy was contracting at a -0.75% annualized rate, down a full percent from the +0.25% estimated last month, and down sharply (-2.97%) from the +2.22% growth rate recorded for the prior quarter.

And according to the “real final sales of domestic product” (BEA’s very own “bottom line” for the economy), the economy shrank at more than a percent (-1.08%) during the quarter, down -3.40% from last quarter’s +2.32%.

A look at the details provides little comfort. The already anemic consumer spending on goods improved a smidgen to +0.10% annualized growth, and fixed commercial investment also improved — although only to a “less bad” contraction rate of -0.21% (from -0.40%). All other changes made the report awash with red: imports were revised downward significantly (a -0.58% decline), inventory growth was weaker by -0.41%, consumer spending on services dropped -0.13%, government spending was -0.05% lower and the contribution from exports declined -0.07%.

Real annualized per capita disposable income was also revised downward by -$25 (now reported to be $38,210 per annum). Meanwhile, the household savings rate was unchanged at 5.5% (the highest rate since the fourth quarter of 2012), which accounts to a large extent for the continued sluggish consumer spending.

For this report the BEA assumed a mild dis-inflationary annualized deflator of -0.12%. Interestingly, during the same quarter the far more responsive Billion Prices Project (BPP) recorded mild positive inflation. If the BPP inflation metric was used to deflate the nominal BEA data the economy could be shown to be contracting at a more than -2.69% annualized rate.

Among the notable items in the report :

  • The headline contribution from consumer expenditures for goods was +0.10% (down -0.97% from the prior quarter).
  • The contribution to the headline from consumer services spending decreased to +1.13% (down -0.78% from the previous quarter). Healthcare spending alone provided +0.60% to the headline number. The combined consumer contribution to the headline number was 1.23%, down -1.75% from the prior quarter.
  • Contracting commercial private fixed investments removed -0.21% from the headline number — down nearly a full percent (-0.93%) from the fourth quarter of 2014. This drop occurred in spending for structures, industrial equipment and IT equipment. Some growth was reported in transportation equipment and intellectual property.
  • Inventory growth added +0.33% to the headline number (up +0.43% from the previous quarter). Once again it is important to note that this number has logically and historically been nearly zero-sum over extended time periods, and future mean reversion to the zero sum should be expected.
  • Governmental spending removed -0.20% from the headline (up +0.15% from the -0.35% for the previous quarter). The remaining contraction was largely the result of decreased state and local spending on infrastructure.
  • Exports are suffering from the strong dollar, and are now reported to be subtracting -1.03% from the headline growth rate (down -1.62% from the previous quarter).
  • Imports subtracted substantially less from the headline number (-0.87%) than during the prior quarter (-1.62%) — also an expected consequence of the stronger dollar.
  • The “real final sales of domestic product” is now contracting at a -1.08% annualized rate. This is the BEA’s “bottom line” measurement of the economy and it excludes the reported inventory growth.
  • And as mentioned above, real per-capita annual was revised downward in this report, but it is still up $432 per year quarter-to-quarter. The new number represents an annualized growth rate of +4.65%. But it is up only +4.18% in aggregate since the second quarter of 2008 — an annualized +0.61% growth over the past 26 quarters. The reported softening growth in consumer spending is a consequence of a significant increase in household savings — i.e., most of that $432 quarter-to-quarter growth went into savings.

The Numbers, As Revised

As a quick reminder, the classic definition of the GDP can be summarized with the following equation :

GDP = private consumption + gross private investment + government spending + (exports – imports)

or, as it is commonly expressed in algebraic shorthand :

GDP = C + I + G + (X-M)

In the new report the values for that equation (total dollars, percentage of the total GDP, and contribution to the final percentage growth number) are as follows :

The quarter-to-quarter changes in the contributions that various components make to the overall GDP can be best understood from the table below, which breaks out the component contributions in more detail and over time. In the table below we have split the “C” component into goods and services, split the “I” component into fixed investment and inventories, separated exports from imports, added a line for the BEA’s “Real Final Sales of Domestic Product” and listed the quarters in columns with the most current to the left :


Click for larger image.

Summary and Commentary

We had trouble writing the headline for this report. We ultimately chose the more politically neutral phrase “BEA Reveals that …” in lieu of the probably more accurate “BEA Admits that …” for the headline. Cynically minded observers have often claimed that the BEA manipulates the first estimate for any quarter to lead future expectations in the right direction — while not fully disclosing pending bad news. Although last month’s first estimate was just barely positive, it was far enough below the expectations of most economists to send a clear warning that even worse numbers will soon be forthcoming. It just seems that the full truth is too painful for full initial disclosure.

It reminds us of the Lucy Ricardo character never divulging the full extent of her latest disaster when first asked. It is only after Ricky inevitably says “Lucy, you have some ‘splaining to do” that the full truth is revealed.

We should expect (dare we say “demand“?) better transparency from a Federal agency that is tasked with tracking the state of the economy — an agency which, unlike Lucy, is not itself culpable for the bad news. The BEA explains that they are working with largely incomplete data some 30 days after the end of the quarter (a situation which may have been acceptable in 1936, but is arguably unacceptable in 2015 — an era of microsecond transactions and real-time settlements). But even in a state of incomplete data (for which they are culpable) they certainly know the tendencies in their sadly lagging data — and therefore they should be capable of better extrapolating where things actually were at the end of the quarter. Instead they seem to take the happiest assumptions available, knowing that they have months (and ultimately years) to finally get the view in the rear mirror correct. Unfortunately, economic decisions are often made from that badly distorted rear-view mirror.

Perhaps the most discouraging aspect of this report is the extent to which many economists were surprised. Perhaps it is they who have “some ‘splaining to do.”


Previous Post

Documentary of the Week: Prof. Stiglitz on TPP 2015

Next Post

Infographic Of The Day: Crazy Car Stats From Around The World

Related Posts

Unlocking the Future: Google's Game-Changing Move to Advertise NFT Games Starting September 15th
Business

Unlocking the Future: Google’s Game-Changing Move to Advertise NFT Games Starting September 15th

by John Wanguba
September 8, 2023
Bitcoin Is Finally Trading Perfectly Like 'Digital Gold'
Economics

Bitcoin Is Finally Trading Perfectly Like ‘Digital Gold’

by John Wanguba
August 5, 2023
Can Worldcoin Overtake Bitcoin?
Economics

Can Worldcoin Overtake Bitcoin?

by John Wanguba
August 4, 2023
Bitcoin Is Steady Above $29,000 Awaiting US NFP Figures
Economics

Bitcoin Is Steady Above $29,000 Awaiting US NFP Figures

by John Wanguba
August 4, 2023
Namibia Will Regulate And Not Ban Crypto With New Law
Finance

Namibia Will Regulate And Not Ban Crypto With New Law

by John Wanguba
July 25, 2023
Next Post

Infographic Of The Day: Crazy Car Stats From Around The World

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins bank banking banks Binance Bitcoin Bitcoin market blockchain BTC BTC price business China crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum Europe Federal Reserve finance FTX inflation investment market analysis Metaverse NFT nonfungible tokens oil market price analysis recession regulation Russia stock market technology Tesla the UK the US Twitter

Archives

  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • Unlocking the Future: Google’s Game-Changing Move to Advertise NFT Games Starting September 15th
  • Bitcoin Is Finally Trading Perfectly Like ‘Digital Gold’
  • Can Worldcoin Overtake Bitcoin?

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.