Friday, February 28, 2014

U.S. Gross Domestic Product for 2013
4th Qtr. are
SURPRISE! Revised Downward

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 3.2 percent in the fourth quarter of 2013 (that is, from the third quarter to the fourth quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.1 percent.

That was the "news" on January 30, 2014; several days before the "mis-State-ment of the Union speech".

The "revised" numbers came out today, February 28: NOT 3.2% growth... but a feeble 2.4% instead.

From the Bureau of Economic Analysis (bea.gov), this stunning number, buried way down in the press release:

2013 GDP

Real GDP increased 1.9 percent in 2013 (that is, from the 2012 annual level to the 2013 annual level), compared with an increase of 2.8 percent in 2012.

1.9% growth, boys and girls, isn't growth at all. 
We are still in Recession.

The increase in real GDP in 2013 primarily reflected positive contributions from personal
consumption expenditures (PCE), exports, residential fixed investment, nonresidential fixed investment,
and private inventory investment that were partly offset by a negative contribution from federal
government spending.  Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in 2013 primarily reflected a deceleration in nonresidential fixed
investment, a larger decrease in federal government spending, and decelerations in PCE and in exports
that were partly offset by a deceleration in imports and a smaller decrease in state and local government
spending.

NOW,,, this strange article from Forbes.com on the revised numbers:

Data from the Bureau of Economic Analysis out Friday shows that real GDP — which measures output produced in the United States — grew at an annual rate of 2.4% in the fourth quarter of 2013. The second estimate is down 80 basis points from the 3.2% advance estimate
BEA put out in January. The figure shows fourth quarter growth relative to the third quarter, when real GDP increased 4.1%.
...
In a note on the report Jim O’Sullivan, chief U.S. economist at High Frequency Economics, pointed out that the results were close to the 2.5% consensus. “While 2.4% is fairly sluggish,” he wrote, “it was despite more adverse than usual weather at the end of the quarter and the government shutdown at the start. The shutdown directly subtracted 0.3 points from the growth rate through the government spending component, but there were likely other effects as well.”  What made up the error in the other 79.7 basis points, ya'll overlooked??

Although weather is expected to depress first quarter 2014 results, O’Sullivan expects at least a 3% growth trend this year. PNC Chief Economist Stuart Hoffman, and Senior Economist Gus Faucher agree that weather will weigh on first quarter sales of consumer durable goods, especially cars and construction. But despite the cold weather, growth picked up in the second half of the year. Growth averaged 3.25% in the second half of 2013 versus 1.8% in the first half.
...
However they concluded, “With less drag from fiscal policy, a pickup in business investment, continued recovery in the housing market, better global growth with recovery in Europe, and moderate gains in consumer spending, real GDP growth for all of 2014 will be about 2.9%.

And that 2.9% GDP growth for 2014 depends on all the above variables 
being quite positive.

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