Further Reads on Q4 GDP
From John Mauldin Thoughts from The Frontline at Investors Insight:
"GDP grew at a miserly 1.1%, which shocked most observers, as well as your humble analyst. It was only a few weeks ago I predicted a slowdown in the economy later this year. I would have expected the 4th quarter to come in lower as part of that process. But this is a lot lower. What was the reason? There were several, but one of them is slower consumer spending.
Consumers turned cautious in the final quarter as high energy prices and rising borrowing costs took a toll on their budgets. Their spending grew at a 1.1% pace, the slowest since the second quarter of 2001 when the economy was suffering through a recession.
Most of the weakness came as people cut back sharply on purchases of big-ticket "durable" goods, such as cars. This spending dropped by a hefty 17.5% rate, the sharpest decline since the first quarter of 1987. Businesses also were more restrained, boosting spending on equipment and software at a 3.5% rate in the fourth quarter, the smallest since the first quarter of 2003."
From James Hamilton's Econbrowser: "As noted by SCSU scholars, once you include all of motor vehicles and parts, the contribution of autos to the fourth quarter GDP figures comes to -2.06%; In other words, if autos had just held steady (after seasonal adjustment) in the fourth quarter of 2005, the latest GDP statistics would have shown 3.2% rather than 1.1% annual growth."
Let's see if Motown continues to rebound in Q1 or not; Last Monday's numbers were a good sign, and we shall see what continued Gulf rebuilding efforts will bring in Q1. We have been banging this drum all along, rates will go up farther than most imagine.
Blame it on lax worldwide monetary policy which combined with global economic growth resulted in the commodities markets going parabolic from a 2001 low. The energy pass through is permanent as long as oil remains above $50, which it should.
There is a distinct possiblity that the Fed may keep raising well into Q2 and beyond.
"GDP grew at a miserly 1.1%, which shocked most observers, as well as your humble analyst. It was only a few weeks ago I predicted a slowdown in the economy later this year. I would have expected the 4th quarter to come in lower as part of that process. But this is a lot lower. What was the reason? There were several, but one of them is slower consumer spending.
Consumers turned cautious in the final quarter as high energy prices and rising borrowing costs took a toll on their budgets. Their spending grew at a 1.1% pace, the slowest since the second quarter of 2001 when the economy was suffering through a recession.
Most of the weakness came as people cut back sharply on purchases of big-ticket "durable" goods, such as cars. This spending dropped by a hefty 17.5% rate, the sharpest decline since the first quarter of 1987. Businesses also were more restrained, boosting spending on equipment and software at a 3.5% rate in the fourth quarter, the smallest since the first quarter of 2003."
From James Hamilton's Econbrowser: "As noted by SCSU scholars, once you include all of motor vehicles and parts, the contribution of autos to the fourth quarter GDP figures comes to -2.06%; In other words, if autos had just held steady (after seasonal adjustment) in the fourth quarter of 2005, the latest GDP statistics would have shown 3.2% rather than 1.1% annual growth."
Let's see if Motown continues to rebound in Q1 or not; Last Monday's numbers were a good sign, and we shall see what continued Gulf rebuilding efforts will bring in Q1. We have been banging this drum all along, rates will go up farther than most imagine.
Blame it on lax worldwide monetary policy which combined with global economic growth resulted in the commodities markets going parabolic from a 2001 low. The energy pass through is permanent as long as oil remains above $50, which it should.
There is a distinct possiblity that the Fed may keep raising well into Q2 and beyond.
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