GDP: Oh Look At The Revisions!

Revise Or Else

Yeah, ok, these are better (more-cooked?) estimates?

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 2.7 percent in the third quarter of 2012 (that is, from the second quarter to the third quarter), according to the “second” estimate released by the Bureau of Economic Analysis.  In the second quarter, real GDP increased 1.3 percent.

Uh huh.  What was the improvement attributed to?

The acceleration in real GDP in the third quarter primarily reflected upturns in private inventory investment and in federal government spending, a deceleration in imports, an acceleration in residential fixed investment, and a smaller decrease in state and local government spending that were partly offset by a downturn in nonresidential fixed investment and decelerations in exports and in PCE.

That (government deficit spending) is bad, not good.  But it’s reported as good and people lap it up.  And inventory build is indeed GDP, but building inventories mean that manufacturers are not selling as fast as they’re producing — this typically happens right in front of recessions!

As for specific indications of future demand?  They’re not so good:

Equipment and software decreased 2.7 percent, in contrast to an increase of 4.8 percent.

Real federal government consumption expenditures and gross investment increased 9.5 percent in the third quarter, in contrast to a decrease of 0.2 percent in the second.  National defense increased 12.9 percent, in contrast to a decrease of 0.2 percent.  Nondefense increased 3.0 percent, in contrast to a decrease of 0.4 percent.

Yep.  Blow money on bombs and guns; a time-honored way to create demand that is recurring.  So long as that’s paid with taxes it’s ok, but when it’s not…..

I’m unimpressed and skeptical, although this report certainly throws some cold water on the “more monetary stimulus NOW!” screaming from certain people on the left.

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