On Wednesday, I noted that “GDP would have been even worse, if it wasn’t for how fast imports have plummeted; They are falling faster than exports, perversely creating a appearance of relative improvement . . .”

Robert F. Dieli, Ph.D. is a longtime observer of Wall Street and the Economy. His site is No Spin Forecast, where he runs Mr. Model, and his Analysis of First Quarter 2009 Real GDP — especially his take on the impact of these weaker imports on final GDP numbers — is dead on:

“An explanation about why the decline in imports is helping GDP growth. As you know, imports are subtracted from GDP. Because imports are declining in absolute terms, you get a positive effect from a negative negative. Just to be clear as to what this chart is telling us: the drop in imports contributed 6.05 percentage points to the GDP growth rate.

What this means is that without the contribution from imports, GDP declined at 12.15% annual rate in Q1. In other words, all of the domestic activity was, as the employment numbers suggested, in free fall! Now, this has some important implications for the profile of growth going forward. When imports stop dropping, and they will, the sign on this term will go back to its normal negative, and when it does, it will expose the true growth rate of the domestic economy. We had best hope that GPDI has gotten back on track by the time the positive effect of negative import growth wears off.”

In other words, without the impact of slowing imports, annualized GDP contraction would have been about 12%.

As is so often the case, the picture is terribly instructive:

q4-q1-imapct-of-imports

Thanks Bob — Good stuff.

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

66 Responses to “Weak Imports Goose GDP”

  1. leftback says:

    So without the fall in imports GDP is -10% for two quarters, which is some people’s definition of a depression.
    The above also means that even if the $ falls and GDP/exports increase then any increase in imports will negate it. This starts to look like the “inverted square root sign” recovery that Soros has talked about.

  2. Just An Australian says:

    How does this compare to previous recessions?

  3. dead hobo says:

    Inventories were down, implying manufacturers will rush out to hire new workers, rebuild, restock, and shower the economy with unending benefits. Consumer spending was up, implying these new inventories will have customers waiting with anticipation.

    The rest doesn’t matter. Time to buy stocks.

    Re the above: C + I + G + (X-M) (from memory) is what you are referring to. So if the net change decreases due to either Increased exports OR Decreased Imports, this is a positive. Ditto if imports decrease because of lowered demand consumer demand overall. So, if consumer sales was supported by declining inventories, then maybe manufacturing will mimic imports next quarter?

  4. dead hobo says:

    I Said

    So if the net change decreases

    I meant

    So if the net change increases

  5. CNBC Sucks says:

    Dollar isn’t going to fall. And your bottom is gonna stick for a while, lefty.

    Mark Faber thinks that the world economic situation is so bad that we will have both recessionary and inflationary effects. I love Faber, but he is wrong. The world economic SYSTEM of deficits and debt is SO BAD that we will have a (rather lame, jobless) RECOVERY with little inflationary risk, at least in the short term, unless the recovery butts up against an upcoming oil crunch. As Soros said, the strength of the dollar is an indicator of how sick the world economic SYSTEM is.

    The can has been kicked far down the road. Make the most of now.

  6. ben22 says:

    Barry, you had better stop with these kind of posts, you’ll make the market go down again like you did with all your crazy talk last year.

  7. JasonF says:

    But on slide #13 of that same report, which has the title “What Does All This Portend For The Recovery?”, the author concludes:

    “The composition of the numbers we just got suggests that we may be setting up to form a bottom.”

    …and also…

    “For now we can say that the current profile of the data is starting to look like those seen in prior recessions about two quarters before the turn.”

    Because your web site hits are down, is it in your interest Barry to make everything sound as bad as possible? You like his analysis, yet you don’t mention the most important conclusion from his analysis, namely, that the economic decline is looking to bottom by the end of Q4.

  8. Mike in Nola says:

    Well, at least Mastercard really surprised me and beat expectations. Market will go up.

  9. hopeImwrong says:

    @ ahab, So business is up for heavy equipment operators. Very bullish.

  10. CTB says:

    Let’s not forget that this caught lots of people offguard. Companies everywhere are ratcheting down producti0n to meet the lower deman level of the US consumer. This is far from complete — recall GM is shutting down (!) for a few months this summer.

  11. CTB says:

    Further, the quick production cut, may be followed by an overshoot and recovery — creating Soros’ square root symbol.

  12. call me ahab says:

    hopeimwrong-

    I wish I was the guy in the backhoe- I could not get more satisfaction then tearing down new homes

  13. jc says:

    It FEELS like -12%!

    All those Asian cars, flat screen TVs and electronic gizmos that people REALLY CAN live without.

  14. speaking of ‘crusty old goats’ !

    this beautiful person: http://www.bloomberg.com/apps/news?pid=20601087&sid=awVpSgnAKPGw&refer=home

    “The U.S. economy is “leveling off at a low level” and doesn’t need a second fiscal stimulus package, said former Federal Reserve Chairman Paul Volcker, one of President Barack Obama’s top economic advisers.

    Volcker, head of Obama’s Economic Recovery Advisory Board, said the 6.1 percent decline in first-quarter gross domestic product reported by the government today was “expected.”… ”

    IOW, “you gotta love it when a plan comes together”.

    “Still, with the financial system functioning only by “the grace of government intervention,” the economy is “in for a long slog” before a recovery takes hold, Volcker said on Bloomberg Television’s “Conversations with Judy Woodruff” airing May 1 at 6 p.m. Government help will continue, and the administration won’t let any banks fail, he said.

    “I’m not here to tell you the economy is going to recover very strongly in the short run,” Volcker said. “There is reason to believe that it should be leveling off, at a low level.”… ibid.
    ~~

    to think that these ‘adjustments’ will be worked out in 6 months, as mentioned above, ignores *Reality.

  15. ahab,

    and yet, we get to pay, additional, Taxes “for the Homeless”..

  16. constantnormal says:

    kinda paints the case for protectionism …

    … until you consider that protectionism shrinks the global pie …

    … but this is how the protectionism that lengthened the Great Depression in the 1930s got its momentum up — people in every country avoid buying imported goods, regardless of the price/quality, and we see global trade begin to shrink at a rapid rate, which feeds back from other nations into our own exports, and further shrinks our own GDP. Import reduction is a major structural element in the process of deflation.

    Less global trade = smaller global GDP’s.

  17. globaleyes says:

    Why’re we worrying about trade? We don’t even make widgets, do we?

  18. TDM says:

    Imports are not a component of GDP and are not subtracted from GDP. Imports are a component of consumption, which is easier to measure than production. Imports are subtracted from total consumption, along with other adjustments, to get GDP. GDP ex Imports is totally meaningless as this is just subtracting Imports from consumption twice.

  19. jc says:

    I don’t think people walk into Walmart thinking “OK, today I buy domestic”. They go in and buy a 3 pack of Chinese made boxers instead of a bigger package, skip buying a Taiwan made cell phone and a Korean made video cam – all without checking the place of manufacture. The long pipelines are being drawn down as we go from spending 105% of 2008 income to 95% of a lower 2009 income. The boa constrictor is on a forced diet.

  20. Marcus Aurelius says:

    MEH: Taxes are supposed to pay for all of this, and the tax base is getting measurably smaller by the day, and like CNBC says, the dollar is, and looks like it will remain, strong.

    So, where will the “money” come from?

    At some point in the future (and as I’ve been saying, it’s a matter of when this will happen, not if this will happen), we will certainly see inflation, as it is the only tool in the box. Increased productivity will not pull us out (even if it increases dramatically, productivity alone cannot offset the current deficit). Neither will consumerism, or some new technology, or an as yet unexploited foreign or domestic market.

    Eventually, we must inflate across the spectrum of our of our economy, or we will default.

    Rock and hard place.

  21. danm says:

    The world economic SYSTEM of deficits and debt is SO BAD that we will have a (rather lame, jobless) RECOVERY with little inflationary risk, at least in the short term, unless the recovery butts up against an upcoming oil crunch
    ————–
    No so sure. Not convinced you should be looking inside your borders for inflation.

    I think that foreign net exporting countries will be forced into devaluing their own currencies creating HUGE inflation that will be exported to the US.

    For example, Canada does not want rates to go much higher than those of the US because that would push our dollar higher and we don’t want that if we want to keep on exporting. The Bank of Canada just announced that it will start printing money. It was written black on white in a francophone paper “print money”, outright buying up Cdn Treasuries.

    Remember that the US debt is so incredibly indebted that this gives all of us foreign countries a incredible opportunity right to print because debt between countries is all relative.

    In the 1930s you had huge capacity because of technological advancements and Europe had finally rebuilt itself and become self-sufficient again.

    That is not the case today. We don’t have excess food and our infrastructure is falling apart after 30 years of consumer spending and filling up the dump yards. All the excess is in sectors that are non-essentials and that will be less in demand with an ageing population: clothes, appliances, houses, cars, etc.

    In the 30s they were dumping food. Today they are tearing down new houses.

  22. danm says:

    And if the US wants to start exporting more it will have to rebuild itself. Between all the announced infrastructure projects coming onstream across the world and the US rebuilding itself for exports, there is bound to be a huge squeeze on resources and energy. Inflationary.

    When government takes over private industry, it always takes more time and more committees. Inflationary.

    When government starts cornering the debt market and makes corporate financing go from 4% in 2001 to 15% today, you know bankruptcies will ensue and capacity will dwindle. Inflationary.

    When governments offer bailouts they kind of have to make sure the money stays local so this implies increasing protectionism. Inflationary.

  23. call me ahab says:

    some interesting footage of new homes being demolished in southern California-

    http://www.calculatedriskblog.com/2009/04/new-homes-demolished-in-victorville-ca.html

  24. dead hobo says:

    JasonF Says:
    May 1st, 2009 at 8:32 am

    But on slide #13 of that same report, which has the title “What Does All This Portend For The Recovery?”, the author concludes:

    “The composition of the numbers we just got suggests that we may be setting up to form a bottom.”

    comment:
    —————–
    1) Anyone who claims, good or bad, that a chart pattern in the past implies an identical chain of events in the future is full of crap. Economics doesn’t work that way, in spite of the fact that a lot of simple minded analysts act as if it does. Events and relationships control lives, not historical chart patterns. The only exception would be a chart of extremely recent behavior AND you understand the underlying reasons WHY the activity occurred. Then you might be able to make an inference, ceterus paribus, only. And, even if you are highly educated, your inference about economic events still has a nearly 50% chance of being wrong.

    2) The analysis behind the chart is interesting. Here are the questions it raises.

    I’m a little rusty, but a simple view of GDP is C + I + G + (X-M). X=Exports. M=Imports.

    The current report said Inventories went down. Analysts (salesmen and their back room men) said “Hurray. Now we get to make more!.” They supported their statement by noticing consumer spending was up. They changed the subject when anything else was noticed.

    Had Imports also sustained a high level that belies the USA propensity to consume, I would also be cheering. It didn’t. Imports decreased more than Exports decreased, causing a net improvement to nominal GDP. If decreased imports was supported by increased Investment, this would imply a “Buy American” campaign was in effect. That didn’t happen either. Basically, these numbers document significant contraction and justifiably pessimism.

    So, putting it all together with a little additional information, here’s what I see —-

    U.S. manufacturers sold off their stuff. People bought it because it was cheap, ignoring imports. Thus, consumer consumption went up in nominal terms but structurally down in absolute terms. Nobody is making more. They appear to be hunkering down. Layoffs continue.

    Insider sales have hit record levels. Investment is down, implying new and better jobs are only a fantasy at this time. Chrysler is bankrupt, want to buy a new Jeep? Or a Chevy? About 6 big banks are insolvent and the US Govt wants to use accounting tricks to change that. Housing prices are still going down. They finally hit my neighborhood and it sucks.

    The stock market has the appearance of a rigged game or another ponzi scheme at this time and happy talk business reporters appear to want to help. This would be good if the stock market run up was real. Since it probably isn’t, all it does is help transfer wealth from those who still have a little to those who are gaming the markets.

    Thus, analysis compared to magic graphs.

  25. [...] was the March decline in GDP only at the 6.1 percent rate?  Some assert that declining imports are the reason (since imports subtract from the GDP, a decline in imports contributes to GDP’s rise).  [...]

  26. danm says:

    Increased productivity will not pull us out (even if it increases dramatically, productivity
    ————–

    I could not agree more.

    We’re going from 5 workers per dependant to 2 workers per dependant over the next couple of decades. And we keep on throwing good money at bad companies.

    Unless we get a shake down short of a revolution, our economy is only going to get less and less efficient.

  27. Onlooker from Troy says:

    The current assumption in the market seems to be that it should get well and resume an uptrend (i.e. bull mkt) 6-9 months prior to the “end of the recession.” That’s using post WWII data and then the most rosy of that data.

    But that’s not what happened in the last downturn. The market resumed a downtrend in ’02 because it was still overvalued from the tech bubble and because the economy was structurally sick. We gave the economy a massive dose of anesthesia and amphetamine with fiscal and monetary policy and the housing market continued it’s outsized rise along with an overleveraged consumer.

    Why on earth should we assume that this market should react in line with the less severe of the post war cyclical downturns when our economy is as sick as an old mangy dog?

    There’s also a sentiment out there that the market was priced for Armageddon in the 600s and now at almost 900 it’s priced right for a really bad recession. 400s maybe, not 600s.

    I’m not so sure yet that this is just a really bad recession and 900 is too optimistic at this time. Just look around at the valuations in stocks and how they’re valued against the future anemic growth and huge debt burden we’re carrying. It’ll take a while, but the market will come to realize that. We’ve also got a whole generation of investors who have been conditioned to accept overvalued stocks, so they can’t keep their hands off of something with a P/E in the teens.

  28. danm says:

    When will we actually sit down and aknowledge that our GDP measure is flawed and destroying us bit by bit? All we care about is growing the number without looking at the quality of the product.

    Are the new houses well built to last 50-100 years?
    Are the children learning the right stuff and going into the right fields?
    Does it make sense to grow rice in California?
    Does it make sense to grow grass in Arizona?
    Are our families healthy physically and mentally?
    Why not destroy a city evey year and rebuilt it from the ground up, wouldn’t that stimulate the economy?

  29. Onlooker from Troy says:

    dead hobo,

    Good analysis, IMO. And I totally agree with the comparisons of data and graphs. There’s a whole lot of that going around, trying to find a market graph or other data that compares with current in some fashion, in order to justify a market run up, or possibly the opposite. It’s just not that easy. Too many variables.

  30. Mannwich says:

    Sounds a like a catalyst for another 25% run up in the markets to me.

  31. Onlooker from Troy says:

    “Why not destroy a city every year and rebuilt it from the ground up, wouldn’t that stimulate the economy?”

    Just wait, that kind of thinking is creeping in. Witness the car scrapping programs that have been proposed here and instituted abroad. We can’t go down the road of destroying things to justify replacing them, IMO. That’s just so obscenely short sighted, and downright immoral, IMO. I know it can be defended using academic economic B.S., but so can a lot of other stupid things we’ve done.

  32. call me ahab says:

    danm-

    good points- I will say though that strife sometimes brings out the creativity in people- think “Blues” and “Jazz”- sitting around in a state of contented “numbness” does not offer great things- however- I guess a person’s “sniffles” will be attended to.

  33. dead hobo says:

    Mannwich Says:
    May 1st, 2009 at 9:59 am

    Sounds a like a catalyst for another 25% run up in the markets to me.

    comment:
    ——————
    Yup. Time to buy the shit out of everything. Then, the fixsters will turn it around and pummel it down again, making tons of cash on the short side. Modern day portfolio theory should include a chapter on figuring out what the crooks are up to and how to follow them.

    DL, just sit tight and wait for them to come to you. Be nimble and be rich.

  34. Mannwich says:

    danm said: “All we care about is growing the number without looking at the quality of the product.”

    Seems like that sickness has pervaded every corner of our so-called economy, no? It’s basically driven just about every perverse behavior that we’ve seen over the past few decades.

  35. Mannwich says:

    @dead hobo: Another so-called economic indicator just came in “better than expected” (I don’t even fully pay attention anymore, am numb to it, ISM index, blah, blah, blah) but at the same time another indicator came in a bit worse than expected. Take a guess which piece of news the nice, helpful anchor on Bloomberg focused on?

  36. Byno says:

    Barry,

    This analysis is incredibly disingenuous. Mr. Dieli is using the same slight of hand the permabulls use.

    Are imports down? Yes. Are exports down? Yes too, but by a smaller amount of imports. IOW, our exports have not been as negatively affected by the recession as our imports.

    To wit: Exports are down app. 20% from their 2Q2k8 peak.
    Imports are down app. 30% from peak
    Q1/Q4 Exports: -11%, Imports – 17.5%

    .’. Our exports are holding up extremely well despite a strong(er) dollar and an anemic global economy. I’ve been commenting here for over six years; you know I’m not a permabull. But, the fact that net exports are improving is a reason for encouragement, not poo-pooing the data. Saying GDP would be down 12% if you factor in import declines is not dissimilar from saying the Patriots would have beat the Jets by 28 if New York hadn’t scored two touchdowns.

  37. Mortimus says:

    “consumer confidence rises to highest level since before credit crisis” …… and the market ticks down

    I think this market just revealed her top

  38. I-Man says:

    Although I am far from a pro with the econ side of this game… wasnt that the worst back to back GDP in like 60 years? I think I read it was worst back to back quarterly decline since 57-58 but correct me if I’m wrong.

  39. Mannwich says:

    Looks like Lloyd just decided it was time to sell?

  40. I-Man says:

    Yeah Mannie…

    they just had to “pop” RIMM real quick first so their hedgie boys could hit the sell because they missed the real top…

  41. Mannwich says:

    Here is that little tidbit of news the nice, helpful Bloomberg anchor coupled with “better than expected news” on another indicator and thus tried to de-emphasize….

    http://www.calculatedriskblog.com/2009/05/ism-manufacturing-shows-contraction-in.html

  42. dead hobo says:

    Mannwich Says:
    May 1st, 2009 at 10:20 am

    Looks like Lloyd just decided it was time to sell?

    reply:
    —————
    Maybe. I think he would stop to squeeze a short if one jumped in front of him and bent over properly.

  43. Greg0658 says:

    danm – “Why not destroy a city evey year and rebuilt it from the ground up”

    because no one wants to spend money .. we all just want to hang on to what we got .. to grow old with or buy really really great deals to then grow old with

    does it matter there is pent up human muscle power .. Nope .. its just to expensive here in the usA .. and if got to cheap .. those people will steal (reap whats owed to em) or fall down and sue to grow old with

  44. danm says:

    This analysis is incredibly disingenuous
    ———————
    I don’t agree. First of all, imports are probably down in large part because oil is down from 100$ in September 2008, not because America has been showing such great restraint!

    And when you net out the effect of imports, you realize just how bad the other variables really are.

  45. danm says:

    Greg0658 Says:

    I was being sarcastic, after what happened with Katrina and all. No matter how bad everything is, it<s still good. The thos is who cares about the wasted resources as long as you can show so GDP growth.

  46. Mannwich says:

    A little off topic but I thought this post over at Naked Capitalism was pretty instructive…..

    http://www.nakedcapitalism.com/2009/05/is-optimism-all-its-cracked-up-to-be.html

  47. DMR says:

    Imports falling faster than exports IS a good thing. It is a reduction of an unsustainable imbalance. The boost in GDP reflects the fewer dollars that are bleeding out of the system. GDP ex-imports would have shown sky high numbers for GDP during the boom years if we were not accounting for the high import number till last year. What exactly is GDP ex-imports measuring? GDP ex-everything grew at zero %, but doesn’t say anything.

  48. centiare says:

    @Marcus Aurelius – You are correct sir, but I disagree with your conclusion.

    Let us, for the moment, roll back the clock to the year 2000, and consider what our situation would be today if the housing bubble & FIRE economic had not occurred ie using home ‘equity’ as an ATM to fuel consumer purchases:

    * Chrysler & GM would both be BK without SUV sales
    * Wall St would have contracted to the same level without securitization
    * Gov’t would have grown to cover high unemployment

    The point I am making is that the Fed/ Treasury have successfully returned us back to the state that existed 9 years ago. The final step required is to inflate the global economy, with currency values remaining relative to each other, so that debt is back to 150% of nominal income.

    However, as I’ve stated before, stabilizing the financial system says nothing about future growth. Like fireman, they can put out the fire, but can’t build a new house. Perhaps most telling is that in the last 9 years, nothing emerged to drive a real productive economy. That is, if we did roll back to 2000, what was occurring simultaneously during the FIRE stage? Nothing, really.

    So what’s to say that anything is waiting in the wings over the next 9 years? This is what I’m driving at: we’ll get houses ‘back in the money’, we’ll double salaries (easy to do if everyone is working directly/indirectly for. gov), the DJI will go to 16k, but we won’t have any true productive growth.

    The US will hang on until a viable alternative emerges – it will mirror the UK during the sick 50s, 60s & 70s. Once another region/nation/state starts attracting intellectual capital, then it’s game over. But that could be generations. In the meantime, smart/creative people will focus their attentions on how to game a corrupt system that rewards certain key players with contracts for health, energy, finance, etc.

    My advice is be that person.

  49. cttfinder says:

    What nonsense and rubbish!

    For starters this guy is a TOTAL LIGHTWEIGHT. Check out his bio.

    Also, his website has an Alexa rank around 8 million. A voice worth listening to? Not!

    Sure, you can back out anything positive and make the overall # look worse…and you back out something negative and make it look much better! Wow!

    Byno’s comments are right on…

    Barry – are you sour grapes about having so much cash on the sidelines during this stunning advance? What are you like 90 percent in cash still?! I’m thrilled to have gone to 100 percent in stocks at Dow 6500 and I’m happily counting my juicy profits!

  50. dead hobo says:

    DMR Says:
    May 1st, 2009 at 10:47 am

    Imports falling faster than exports IS a good thing.

    reply:
    —————–
    Not necessarily. If Imports are offset dollar for dollar by domestic production, then you are absolutely correct.

    In this case, it looks more like evidence of total economic contraction. In other words, less total spending is going on. US inventories were distressed out and aren’t being replaced significantly. Economically, it would imply the velocity of money is diminishing and the classic ‘pushing on a string’ axiom is taking hold. It implies less cash is being lent, even to those who import goods, let alone to those who ultimately buy them. It will take another quarter or two to answer, but the real question now is “Will the US look more like Japan that it ever expected to?”

  51. sbailey says:

    If imports hadn’t dropped, then consumption, investment, and government spending would all have been higher (somebody has to buy those imports), and so GDP would have been higher. It’s misleading to look at the effect as if it were a cause.

  52. Marcus Aurelius says:

    centiare:

    Agreed. Inflation to cover our debt can only bring us back to zero, and then must be stopped in its tracks. Not at all an easy thing to do, and maybe not possible at all. As for growth, I have commented in the past that great changes in economic fortunes usually result in great changes in social structure, and I don’t think this time will be any different. Until we have built a stable base, we will not resume growth of the broader economy.

    As for your last sentence, I believe that there has never been greater opportunity for the entrepreneurialy-minded and aggressive among us. The death of the mighty oaks provides more light to the green sprouts (sorry) below.

  53. Marcus Aurelius says:

    cttfinder:

    You da’ man!

  54. adavydov says:

    I’m sure that had the number been -12%, the markets would have been up twice as much as they were, citing some BS reason.

  55. rootless_cosmopolitan says:

    Sorry about interrupting the party. Maybe I have missed someone while scrolling through the comments to the posting by Barry. Has no one noticed how deeply flawed this postings is? Dieli is not dead on. His reasoning, which is supported by Barry obviously, is logically dead wrong, instead.

    GDP and its change are supposed to measure domestic activity and its change, respectively. For that reason, imports have to be subtracted to calculate the GDP and its change. The GDP is not “goosed” by this subtraction. If you don’t subtract imports and their change as Dieli does to get to the numbers shown with the pink bars in the graphic you don’t exclude imports in the GDP and its change. You include imports, instead! Thus, the pink bars in the graphic don’t show “GDP ex contributions from Imports” as it is claimed. On the contrary, the legend should say “GDP Change Plus Contributions from Imports”. Therefore, you can’t logically conclude from the new -12% number that the GDP was in free fall, because this number measures something else, but not the GDP change (or the “real” GDP change as Barry and Dieli apparently think).

    rc

  56. Marcus Aurelius says:

    rc:

    I think, if I’m not mistaken, and I’m usually mistaken, this sentence in the OP was the crux of the biscuit:

    “When imports stop dropping, and they will, the sign on this term will go back to its normal negative, and when it does, it will expose the true growth rate of the domestic economy.”

  57. MRegan says:

    Centiare-

    I recommend that you reconsider this statement: “In the meantime, smart/creative people will focus their attentions on how to game a corrupt system that rewards certain key players with contracts for health, energy, finance, etc.

    My advice is be that person.” (kind like an Enron trader taking money from Grandma in Pasadena)

    Nihilism is never a good answer. My advice is be a person better than that sort of person.

  58. Transor Z says:

    Okay, going into the deep end here with my water wings and floatie:

    Wouldn’t this be more valuable if Dieli had floated a hypothesis about how Imports are being temporarily distorted, identified probable sources of distortion, quantified the degree of distortion, and then applied a correction to the Imports data — rather than removing it from the GDP equation altogether?

    So “GDP ex Contributions from Imports” should be “GDP ex Contribution from Import Distortion.”

    Back to watching Dora the Explorer.

  59. rootless_cosmopolitan says:

    @Marcus Aurelius:

    LOL

    Yes, you are right. It’s the crux. Dieli isn’t even consistent. He apparently wants to have it both ways regarding whether the import term in the GDP equation distorts “the true growth rate”.

    rc

  60. [...] as bad as 1Q GDP was, and it was bad, it was actually helped out significantly by the trend in imports, according to economist Robert F. Dieli, who operates the site Mr. Model (hat tip to Barry [...]

  61. hopeImwrong says:

    The great thing about the bad GDP, next quarter the 2nd derivative will start to turn! More bullish news!

  62. [...] Over at the Big Picture blog there has been talk about how bad GDP would have been if we take away the positive contribution of imports. [...]

  63. [...] as the regular-bad has been of late. Some of the data is still pretty terrifying; consider this adjusted GDP perspective courtesy of Barry Ritholtz. The pain has not ended, and if media makers great and small walk around [...]

  64. [...] Meanwhile the know-nothing pajama clad bloggers say the GDP is hiding deep problems: An explanation about why the decline in imports is helping GDP growth. As you know, imports are subtracted from GDP. Because imports are declining in absolute terms, you get a positive effect from a negative negative. Just to be clear as to what this chart is telling us: the drop in imports contributed 6.05 percentage points to the GDP growth rate. [...]

  65. “Perhaps most telling is that in the last 9 years, nothing emerged to drive a real productive economy. That is, if we did roll back to 2000, what was occurring simultaneously during the FIRE stage? Nothing, really.”

    then: ” In the meantime, smart/creative people will focus their attentions on how to game a corrupt system that rewards certain key players with contracts for health, energy, finance, etc.”

    Centiare-

    gaming health, energy, finance is something new? is that your point?

  66. [...] In situatia Romaniei se afla si SUA, tara care are ei ea deficit extern iar pe fondul crizei, importurile au scazut semnificativ, fapt care a avut un impact pozitiv asupra evolutiei PIB in primul trimestru. Astfel, PIB-ul SUA a scazut cu 6.1% in T1 insa daca inlaturam efectul pozitiv al scaderii importurilor, scaderea ar fi fost de 12% !! (sursa) [...]