Post by unlawflcombatnt on Jul 28, 2006 19:53:07 GMT -6
Today's GDP report indicates further slowing of the U.S. economy. The 2.5% second quarter GDP growth was less than the 3.0% predicted. In addition, even the 2.5% increase overstates the economy's strength. Final Sales of GDP, which many consider a better indicator of the economy, increased only 2.1%. Without the addition of unsold inventories to the total GDP, the 2nd quarter GDP increased would have been only 2.1%, not 2.5%. The difference is that (unsold) inventories increased significantly by $52.6 billion.
Also of interest is the downward revision of many of the previous 3 quarters statistics, as well as upward revision of inventories. The 2006-1st quarter inventories were revised upward from $29.5 billion to $41.2 billion. (This means $11.7 billion less of our GDP was actually sold). For the 4th quarter of 2005, unsold Inventories was revised upward by $5.4 billion, from $37.9 billion to $43.5 billion. 3rd quarter inventories were also revised upward by $0.6 billion. Final Sales of GDP were also revised downward slightly for the previous 3 quarters.
Residential Investment (real estate investment) was revised downward sharply for the previous 2 quarters, marking 3 straight quarters of declining investment in real estate. 2nd quarter 2006 Residential Investment declined 6.3%. 1st quarter Residential Investment was revised downward from +3.3% to -0.3%. Residential Investment for the 4th quarter of 2005 was revised downward from +2.8% to -0.9%. These newly stated declines in Residential Investment are certainly more consistent with rapidly declining new home sales. Below is a copy of Briefing.com's chart showing the numbers posted on 7-27-06 vs. the actual report and "revised" numbers for the previous quarters' GDP.
GDP comparison
Today's GDP report can be found at: Briefing.com
The previous years' GDPs have also been revised downward. Year 2005's GDP was revised downward from a growth of 3.5% to a growth of 3.2%. Year 2004's GDP was revised downward from 4.2% to 3.9%. These numbers can be seen from the copy of the chart from page 11 of the U.S. Bureau of Economic Analysis (BEA) report below.
Here is the link to the BEA's report on the GDP from 7-28-06.
www.bea.gov/bea/newsrelarchive/2006/gdp206a.pdf
However, the most concerning aspect of the GDP report is that an increasingly larger amount is being financed by borrowed money, not income. The annualized difference between personal income and spending (also known as "savings") widened to a -$141 billion. Personal Consumption Expenditures increased $44 billion more than Personal Income. Economic "growth" continues to be funded largely by the expenditure of borrowed money, not earned income. It's unknown how much longer our current GDP "growth" can be financed by ever increasing debt. But one thing is certain. This is not a sustainable course.
Increasing inventories and increased consumer "deficit" spending are not signs of a healthy economy. They're signs of an economy that's circling the drain.
Also of interest is the downward revision of many of the previous 3 quarters statistics, as well as upward revision of inventories. The 2006-1st quarter inventories were revised upward from $29.5 billion to $41.2 billion. (This means $11.7 billion less of our GDP was actually sold). For the 4th quarter of 2005, unsold Inventories was revised upward by $5.4 billion, from $37.9 billion to $43.5 billion. 3rd quarter inventories were also revised upward by $0.6 billion. Final Sales of GDP were also revised downward slightly for the previous 3 quarters.
Residential Investment (real estate investment) was revised downward sharply for the previous 2 quarters, marking 3 straight quarters of declining investment in real estate. 2nd quarter 2006 Residential Investment declined 6.3%. 1st quarter Residential Investment was revised downward from +3.3% to -0.3%. Residential Investment for the 4th quarter of 2005 was revised downward from +2.8% to -0.9%. These newly stated declines in Residential Investment are certainly more consistent with rapidly declining new home sales. Below is a copy of Briefing.com's chart showing the numbers posted on 7-27-06 vs. the actual report and "revised" numbers for the previous quarters' GDP.
GDP comparison
Today's GDP report can be found at: Briefing.com
The previous years' GDPs have also been revised downward. Year 2005's GDP was revised downward from a growth of 3.5% to a growth of 3.2%. Year 2004's GDP was revised downward from 4.2% to 3.9%. These numbers can be seen from the copy of the chart from page 11 of the U.S. Bureau of Economic Analysis (BEA) report below.
Here is the link to the BEA's report on the GDP from 7-28-06.
www.bea.gov/bea/newsrelarchive/2006/gdp206a.pdf
However, the most concerning aspect of the GDP report is that an increasingly larger amount is being financed by borrowed money, not income. The annualized difference between personal income and spending (also known as "savings") widened to a -$141 billion. Personal Consumption Expenditures increased $44 billion more than Personal Income. Economic "growth" continues to be funded largely by the expenditure of borrowed money, not earned income. It's unknown how much longer our current GDP "growth" can be financed by ever increasing debt. But one thing is certain. This is not a sustainable course.
Increasing inventories and increased consumer "deficit" spending are not signs of a healthy economy. They're signs of an economy that's circling the drain.