So again I’m hoping everyone sees this as good news. 4th quarter GDP up 3.3% way outpacing expectations. And an increase of 2.5% for the year. Not too bad. Here’s the actual report:
"In addition to the better than expected GDP move, there also was some progress on inflation.
Core prices for personal consumption expenditures, which the Federal Reserve prefers as a longer-term inflation measure, rose 2% for the period, while the headline rate was 1.7%.
On an annual basis, the PCE price index rose 2.7%, down from 5.9% a year ago, while the core figure excluding food and energy posted a 3.2% increase annually, compared with 5.1%."
So just to be clear, because last year 4th quarter GDP was revised from 2.9% to 2.7% this is somehow bad news? But just as an example of how this works, each quarter has two revisions. For example, 3rd Quarter 2023 was initially 4.9%, then revised up to 5.2% and then the final revision was to 4.9%. Oh my god the horror. They update things as they get additional information. These are always the initial estimate. And an initial estimate of 3.3% when they were expecting 2% is good. No way to spin that. And please stop with these skewed numbers track. I’ve given up trying to explain to people here what “seasonably adjusted” means. If you honestly believe that’s an issue then you should never pay attention to any 4th quarter GDP numbers. And that’s just silly. And there was a jump in first time jobless claims this week. I didn’t intend for this thread to be about every single economic data point. But glad you were able to find one that you like. But that’s a volatile number. Most professionals look at the 4 week average. Which was down. But you forgot to mention that. But even with an uptick this week they are it’s showing a strong growth in jobs based on first time applications.
Of course it is good news. It is also a temporary illusion.
The current economy is being buoyed (READ: on paper only) by spending out the pile of helicopter money left over from the great COVID giveaway.
M2 (often called “the money supply”) is the total of all wallet-cash, checking and savings balances, CDs etc… Currently we are still spending down the big pile of money that was printed in response to COVID. (see below)
Thing 1)
I grow corn. I eat a lot of corn because I grow a lot of corn.
Thing 2)
My fields are much less productive. I cannot even grow enough corn to feed my family. I am feeding my family, for now, only because a while ago someone dropped off a truckload of corn. I am eating the dropped-off corn. My fields don’t grow enough corn to feed my family.
Thing 1 is not Thing 2
It is always good news that the farmer’s family has enough food to eat, but that does not mean his formerly-healthy fields are still healthy.
Previous presidents had to deal with things like the dot.com crash, the War on Terror and the GFC but still spent less (after interest) than the likes of Trump or Biden. Both of those clowns spend money like they were someone else’s money.
When you (or the US economy) struggles through and is fed only out of previous helicopter money that is not a strong economy.
“Oh but look the refugees are eating a lot of rice out of the rice truck! Obviously there is no problem here.”
Pretending you don’t see the giant rice truck when I show it to you is your problem not mine.
