GDP = -6.2%
By Barry Ritholtz - February 27th, 2009, 8:30AM
The official GDP data is out — its the worst showing in a quarter-century — and once again, I am compelled to ask:
WHO THE HELL IS STILL SURPRISED BY THESE NUMBERS?!?
(use comments to discuss)
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Next release — March 26, 2009, at 8:30 A.M. EDT for:
Gross Domestic Product: Fourth Quarter 2008 (Final)
Corporate Profits: Fourth Quarter 2008
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Source:
GROSS DOMESTIC PRODUCT: FOURTH QUARTER 2008 (PRELIMINARY)
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
PDF of full release
http://www.bea.gov/newsreleases/national/gdp/2009/pdf/gdp408p.pdf
February 27th, 2009 at 8:37 am
I thought it might be revised back to at least that 5.6 number that had been predicted. -6.2% is pretty damn awesome. I wonder if the final number that goes in the BEA books is close to -7.
Bluh.
February 27th, 2009 at 8:41 am
…absolutely bloody awful. But we knew that.
February 27th, 2009 at 8:48 am
Gonna go out to the backyard and start digging a foxhole…maybe some breastworks and trenches…
February 27th, 2009 at 8:50 am
2005=Tranches
2009=Trenches
Hardy-harhar.
February 27th, 2009 at 8:51 am
sure, we can furrow our Brow over whether the ticker prints 5.6 or 6.2, I drive by my rear-view mirror all the time..
easier than wanting to know why we’ve put ~50, 000 US casualties through the meat-grinder of our Nation’s longest military engagement, right?
http://www.thefreedictionary.com/casualty
http://zfacts.com/p/Iraq-war-casualties.html
February 27th, 2009 at 8:56 am
Q4 GDP was revised to a decline of 6.2% from -3.8% and was worse than the consensus of -5.4%. A main factor in the discrepancy was a revision to the price deflator from -.1% to +.5% as this impacts REAL GDP, and thus lowered GDP by an extra .6%. Thus nominal GDP was revised to -5.7% vs expectations of -5.5%, so not that far apart. Personal spending was revised lower by .6% to a decline of 4.3%, the weakest since 1980. The inventory change, which was +$6.2b in the initial reading, was revised to negative $19.9b. The trade deficit was also revised higher due to a lower revision to exports. Residential construction was actually revised slightly higher but non residential was lower. Spending on equipment and software was revised a touch lower. Bottom line, the nominal GDP revision was close to in line with the consensus and thus why the futures are little changed post data but either way, we knew the # was going to suck and was just a degree of suckiness and with Q1 2/3 over, its old news anyway.
February 27th, 2009 at 8:57 am
Even more exciting is that the economy in 1Q2009 accelerated down. The corporate suits only really started to sack huge swathes of their employees starting in January as everyone held their breath and had hoped the Christmas season would not turn into the debacle some feared. Now, the corporations are killing demand in the economy, hoping that somebody else will maintain it for them. If the 4Q2008 was a -6% GDP YoY, just what will this year’s first quarter look like?
February 27th, 2009 at 9:00 am
Hey, Gawdfather, what are those trenches intended for? We are going to use them for defensive purposes or for a more appropriate use with the financial mavens who caused this debacle?
February 27th, 2009 at 9:00 am
A necessary but not sufficient condition for our economy/markets to bounce back is for the data to start sucking at a slower rate than it has been sucking at.
Hmmm, let’s see…
GDP bad and getting worse
Unemployment bad and getting worse
Home sales bad and getting worse
Must be a giant mustard seed, right? No wonder we’re so much crap…
HCF
February 27th, 2009 at 9:03 am
AND very much worse than the GDP assumptions used in Obama’s released budget yesterday.
February 27th, 2009 at 9:07 am
I need some context. According to the report, GDP increased 1.1% for all of 2008, despite the economy being in a recession for the entire year.
How is this possible?
February 27th, 2009 at 9:11 am
it is… a backward looking statistic?
Eventually will make Q4 turnaround comparisons easier to make.
February 27th, 2009 at 9:12 am
Real
GDP
2008 1.30
2009 (1.20)
2010 3.20
2011 4.00
2012 4.60
2013 4.20
February 27th, 2009 at 9:16 am
Isn’t a depression generally considered a GDP decrease of 10%? At this rate, we are officially depressed by middle of next year.
February 27th, 2009 at 9:20 am
This is quite a legacy left to us by George Bush. And so much for the conservative economic policies of them last 28 years starting, in earnest, with Reagan.
February 27th, 2009 at 9:22 am
This may seem off subject but I don’t think it is….
If we agree that our “leaders” continue to do such a terrible job, why do we continue to elect them?
In California, for example, we are in terrible shape. Our legislature continues to dig us in deeper. Their approval rating is about 21%. Yet, the same idiots get re-elected.
If WE are not willing to do some heavy lifting, isn’t this all our own fault?
February 27th, 2009 at 9:28 am
Neal, the true leaders are shut out by the media, or slammed as being wing-nuts! Even if they did get in the system is so entrenched in its own shit, that all that can really happen is more crap. One must go to the wilderness to find truth!
February 27th, 2009 at 9:31 am
Fellow S&P 500 bears….
I can see the outlines of a completed move down from 875 at around 717 – 726. Consider lightening up shorts…Put some bucks in the bank.
February 27th, 2009 at 9:32 am
Intrade depression contract spiked to 85% after the news release, they measure depression is -10% on rolling 4Qs on final numbers
February 27th, 2009 at 9:32 am
Gonna go out to the backyard and start digging a foxhole…maybe some breastworks and trenches…
Potato patches would be FAR more useful.
Less digging too.
February 27th, 2009 at 9:35 am
How can subsequent gov reported numbers always come out worse than the original reports? The original numbers get P1 coverage and revised & final numbers get buried – unless they’re exceptional like these. If US is gaming GDP & unemployment reports imagine whats happening in China!
February 27th, 2009 at 9:43 am
Here’s a question. From this news release, how can you still have GDP growth of $10 billion in 2009 when the GDP growth rate is negative 1.2% for the year. One is a function of the other so this is not making any sense to me.
Economic assumptions in Obama’s proposed budget
By The Associated Press, The Associated Press
1:42 p.m. February 26, 2009
The cost of President Barack Obama’s proposed government budget for 2010 is based on several assumptions about how the economy will perform. Gross Domestic Product (GDP) figures are in trillions of dollars. Real GDP figures are in percentage change from the previous year after accounting for inflation. Inflation is measured as the percentage change in consumer prices (CPI) from year to year.
Indicator 2008 2009 2010 2011 2012 2013
GDP 14,281 14,291 14,902 15,728 16,731 17,739
Real GDP 1.3 -1.2 3.2 4 4.6 4.2
CPI 3.8 -.6 1.6 1.8 2 2.1
Jobless 5.8 8.1 7.9 7.1 6 5.2
Interests rates on
91-day Treasury bills 1.4 0.2 1.6 3.4 3.9 4
10-year Treasury notes 3.7 2.8 4 4.8 5.1 5.2
February 27th, 2009 at 10:08 am
Greenspan and the other blind fed members.
February 27th, 2009 at 10:31 am
SDS?
(got some @ 89ish yesterday.. all good until swaps are invalidated by the feds, I guess it’s playing chicken..)
February 27th, 2009 at 10:36 am
Shocked! Shocked that the economy is tanking. How could anyone have prediced this.
Nothing to see here. Move along. Oh, give me your wallet and your kids future first…
February 27th, 2009 at 10:37 am
Large GDP revision; 1Q could be even weaker
4Q GDP came in much below consensus expectations at -6.2% q/q annualized,
with most of the surprise stemming from a drastically weaker consumer spending
estimate of -4.3% versus the -3.5% in the advance GDP report. The numbers
suggest a much weaker starting point for the first quarter and could take our 1Q
GDP estimate down from the -6.3% we are currently tracking – in other words the
pace of contraction is escalating rather than improving.
Commercial construction crumbling
Final sales to domestic purchasers (the domestic demand components of the
report) was revised down to -5.7% from -4.9% previously, which is the weakest
result since the 1980 recession. Outside of consumption, we also saw significant
downward revision to commercial construction investment, to -5.9% from -1.8%
marking the steepest drop in over 4 years. Capex and residential construction
both still clocked in with declines well in excess of 20%.
Savings rate revised higher
An upward revision to 3Q wages and salaries (from the introduction of more
comprehensive QCEW data) and the lower spending profile took the savings rate
up to 3.2% from the 2.9% preliminary read. This is the highest savings rate since
2001 and a significant leap from the nearly flat pace of a few quarters ago. Still we
think the trend toward higher savings will continue as consumers repair balance
sheets, which will remain a significant barrier to growth for the next several years.
Core PCE prices were revised slightly higher to 0.8% q/q annualized, but the
yearly rate still slowed to 1.9% in 4Q from 2.3% in 3Q
February 27th, 2009 at 10:42 am
I hope we all can live off our savings when major corps start to crumble.
I think PresBO will finally realize he has to nationalize when this happens or potentially happens.
February 27th, 2009 at 11:00 am
PrahaPartizan,
Where in Praha? Am a Vinohrady resident.
February 27th, 2009 at 11:29 am
Jeff, you lucky dog you. I looked up some info in a book I have around my apartment and learned that Vinohrady appears to be totally cool.
Regrettably, my user name doesn’t refer to my location so much as my ethnic heritage. Sorry to have to disappoint you.
February 27th, 2009 at 11:51 am
Quote Barry:
“WHO THE HELL IS STILL SURPRISED BY THESE NUMBERS?!?”
Phil Gramm perhaps?
February 27th, 2009 at 12:24 pm
AT,
Just curious, what happened to the 600’s? Can you recommend a good source for learning EW theory?
February 27th, 2009 at 12:41 pm
watching our Commander in Chief on the air and having read 1/2 the thread of postings
maybe the Capitulation you’all are looking for is military volunteerism jumps …
folks wanting to be in the right ‘ism for the coming days
….. from the artist with a new focus, to bloggers with a furror, to MIC activity in markets
Disaster Capitalism works … unfortunately
February 27th, 2009 at 12:51 pm
tranchefoot;
The call this morning is a ’short term’ call for shorter term traders. Longer term we’re heading for something closer to 600…just wanted to put up a message for any friends pressing short bets this a.m…..
There will be plenty of bear rallies on the road to lower prices….
We could still see 722 ish soon, but if we set a new low today I think it’ll be a short term “bear trap.”
Ritholtz has stated a great trader axiom here a few times: “It’s the not the news that matters, it’s the reaction to the news.” When the market stops going down on bearish developments, it’s telling you something…..
[Elliott Wave Principle by Frost/Prechter is a good start]
February 27th, 2009 at 1:14 pm
AT,
Thanks!
February 27th, 2009 at 3:54 pm
So, this week we got worse than expected GDP, unemployment, housing and manufacturing numbers yet the markets have hung in there. The only markets showing any semblance of reality are commodities as they sell off. Not too worry. Once all that inflation caused by funding trillion dollars deficits to bail all of America out catches up with us, Bernanke will ride to the rescue and save us. Right!! No, what will occur than is the realization that the major fundamental issues with this economy (i.e. banks and foreclosures) are still with us. Only then we’ll be in a much deeper financial hole. At that point no one is going to want anymore of our debt, the dollar will become toast and commodities will party like it’s 1999–again.
February 27th, 2009 at 5:37 pm
Don’t worry, it will all get better in the 2nd half of 2009. Heard it on CNBC.
February 27th, 2009 at 6:50 pm
Hoffer is right. Nobody wants to the talk about the ongoing tragedy of using poor Americans as cannon fodder. It’s about a trillian bucks in money for the pentagon a year. Over 700 bases. I lived on base as a kid. They are like cities. They’ve got everything except red light districts. You might call them a socialist caste system. There are no real poor or real rich either. Why can’t they just stop all that shit? Because somebody is war profiteering in peace and in war.
As for GDP: It’s much worse than a paltry 6 or 7% contraction. It’s more like the 12% Japan is going through. They run honest numbers there. We are broke and now we are supposed to wave a bigger fist at the world with MORE soldiers? Empires really are stupid. Hubris never ends well. Too bad. It’s so damned obvious that the problem we have is systemic. And the President is doing nothing to change the system. So hold on to your wallet and grow a nice vegetable garden. Oh, and contribute to the local police force. You never know when the fascist thing will get here.
February 28th, 2009 at 8:56 am
Pat G “the markets hung in there”?
A 5.5% weekly decline in the major averages is “hanging in there”?
John Ryder of RDQ expects 700k Feb layoffs but the more interesting number will be the revisions of the Jan & dec layoff numbers. I bet we’re really close to 1 million when the revised numbers are added to Feb.
February 28th, 2009 at 7:18 pm
Geesh. Has there been one economic report that hasn’t been “worse than expected?” I wonder if that was also the battered mantra in the 1930’s.