Below is the GDP info from 2007 through the 3rd quarter of 2010. Obama and his minions tells us we are in a recovery. When I look at the data, I note the following things:
- GDP is up only 4.7% since 2007.
- Consumer expenditures were 69.7% of GDP in 2007. Now that consumers are frugal and austerity has broken out all over the country, consumer expenditures are now 70.4% of GDP.
- Consumer expenditures are at an all-time high and have risen by 5.8% since 2007. The deleveraging hunkered down consumer storyline is a big lie.
- You?ll be happy to know that the Federal Government has been able to increase spending by 26% since 2007, with military spending also rising by 26%. Thank God for war.
- The supposedly downsizing state governments have also increased spending since 2007.
- Imports have surged by 22% since 2009 as American consumers continue to press the accelerator as we approach the cliff.
- Private domestic investment (the stuff that really grows an economy) is still 17% below the 2007 level.
After reviewing this data, I?m more convinced than ever that we are screwed. The policies and programs put forth by Obama and the Federal Reserve have propped up an unsustainable economic system. We cannot have consumer expenditures account for 70% of GDP. We cannot run $550 billion trade deficits. We cannot have government spending account for 20.5% of GDP, while private investment totals only 13% of GDP. This will end badly. We can chose to end it ourselves, or the laws of physics will end it for us.
| 2007 | 2008 | 2009 | 2010-I | 2010-II | 2010-III | |
| Gross domestic product | 14,062 | 14,369 | 14,119 | 14,446 | 14,579 | 14,730 |
| Personal consumption expenditures | 9,806 | 10,105 | 10,001 | 10,231 | 10,285 | 10,377 |
| Goods | 3,358 | 3,380 | 3,231 | 3,380 | 3,378 | 3,409 |
| Durable goods | 1,159 | 1,084 | 1,027 | 1,061 | 1,074 | 1,084 |
| Nondurable goods | 2,198 | 2,296 | 2,204 | 2,319 | 2,303 | 2,325 |
| Services | 6,449 | 6,725 | 6,771 | 6,851 | 6,908 | 6,968 |
| Gross private domestic investment | 2,295 | 2,097 | 1,589 | 1,740 | 1,842 | 1,896 |
| Fixed investment | 2,266 | 2,138 | 1,716 | 1,690 | 1,761 | 1,766 |
| Nonresidential | 1,638 | 1,665 | 1,364 | 1,350 | 1,404 | 1,439 |
| Structures | 525 | 582 | 452 | 380 | 382 | 388 |
| Equipment and software | 1,113 | 1,083 | 913 | 970 | 1,023 | 1,051 |
| Residential | 629 | 473 | 352 | 340 | 357 | 327 |
| Change in private inventories | 29 | -41 | -127 | 50 | 80 | 130 |
| Net exports of goods and services | -714 | -710 | -386 | -480 | -539 | -562 |
| Exports | 1,662 | 1,843 | 1,578 | 1,758 | 1,818 | 1,842 |
| Goods | 1,162 | 1,295 | 1,063 | 1,213 | 1,263 | 1,275 |
| Services | 500 | 548 | 515 | 545 | 555 | 567 |
| Imports | 2,376 | 2,554 | 1,965 | 2,238 | 2,357 | 2,404 |
| Goods | 2,002 | 2,149 | 1,588 | 1,844 | 1,957 | 1,993 |
| Services | 374 | 405 | 377 | 394 | 400 | 411 |
| Government consumption expenditures and gross investment | 2,674 | 2,878 | 2,915 | 2,956 | 2,991 | 3,019 |
| Federal | 976 | 1,080 | 1,140 | 1,178 | 1,207 | 1,234 |
| National defense | 662 | 737 | 772 | 796 | 813 | 831 |
| Nondefense | 314 | 343 | 368 | 382 | 394 | 403 |
| State and local | 1,698 | 1,799 | 1,775 | 1,778 | 1,784 | 1,785 |
click to enlarge
- ?The change in real private inventories added 1.44 percentage points to the third-quarter change in real GDP after adding 0.82 percentage point to the second-quarter change. Private businesses increased inventories $115.5 billion in the third quarter, following increases of $68.8 billion in the second quarter and $44.1 billion in the first.?
Without the boost in inventories, GDP would have been barely positive in Q3.
- ?Real personal consumption expenditures increased 2.6 percent in the third quarter, compared with an increase of 2.2 percent in the second.?
This was a little stronger than expected, and PCE will probably slow over the next couple of quarters.
- Investment: Nonresidential structures increased 3.9 percent, equipment and software increased 12.0 percent and real residential fixed investment decreased 29.1 percent.
As expected, residential investment declined sharply after the Q2 tax credit boost.
Overall this was a weak report and will not derail QE2 next wednesday (further easing from the Fed).
Disclosure: No positions
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