Q2 GDP 1.9%; Q4 GDP = -0.2%; New Jobless Claim +448k

Across the board, this was simply a horrible, recession set of data:

Initial Jobless Claims448k. That’s the worst level since April 2003.

Q2 GDP: 1.9%, well below consensus of 2.3%.

Q4 GDP Revisions: Revised from +0.6 down to -0.2%; The first negative quarter (Don’t say we didn’t warn you) since Q3 2001.

Q1 GDP Revisions: Revised down to 0.9% from 1.0%

Note — I expect these revisions will get revised even lower in the future.

Durable Goods:

Consumer Spending: Despite $100 billion in rebate checks, consumer spending was up  only .56% — the bulk of which was (undercounted) food and energy inflation. Nominal spending for the quarter was 3%.   

Inflation: The personal consumption expenditure price index rose at a 4.2% annual rate.

Revisions: A major set of revisions, and nearly all were negative. The economy contracted in the last three months of 2007, providing the first negative quarterly GDP data. Q4 GDP 2007 was revised to a negative number from +0.6% to -0.2%. And, this is very likely to be revised even lower in the future.

Just nasty numbers across the board.

One last "surprise" — Bill King observes that the GDP Price Index inexplicably tanked to 1.1% in Q2; 2.4% was expected. Nominal GDP declined to 3% from Q1′s 3.5%. Thus, the Q2 GDP benefited by 1.5% points, thanks to the mysteriously collapsing GDP Price Index, down to 1.1% from Q1′s 2.6%.

Hence, I expect Q2 2008 GDP to eventually get revised downwards to 0.4% — or worse.

Here are the charts:

>
Real GDP Growth
Real_gdp_q2_08

Chart courtesy of Barron’s Econoday

>
New Jobless Claims
July_31_new_claims
Chart courtesy of Barron’s Econoday

>

Larry, you have some ‘splainin to do!

James, are you really going to make me wait for that Bladerunner DVD?

>

Previously:
Recessions Often Begin With Positive GDP Data (May 2008)

http://bigpicture.typepad.com/comments/2008/05/positive-gdp-re.html

Sources:
GROSS DOMESTIC PRODUCT: Second Quarter 2008 (Advance) 
BEA, JULY 31, 2008
http://www.bea.gov/newsreleases/national/gdp/2008/gdp208a.htm

Summary of GDP Revisions
http://bigpicture.typepad.com/comments/files/summary_of_gdp_revisions.pdf

Related:
U.S. economy suffers fourth-quarter contraction
Revisions show spending slower, profits higher than previously thought
Rex Nutting
MarketWatch, 9:01 a.m. EDT July 31, 2008
http://www.marketwatch.com/news/story/commerce-dept-concedes-us-economy/story.aspx?guid=%7BB40570D2%2D40FB%2D45BD%2D8920%2DFEC19E1A1F26%7D

Category: Data Analysis, Economy, Employment

Category: Data Analysis, Economy, Employment

The “No Loss Sale” Rule

David Weidner’s new column (out tomorrow) proposes outlawing the sale of any stocks for a loss.

Very clever!

Cox: But I was getting a pedicure the other day and I thought, ‘Why not just short selling?’ What about ALL selling?’ Why not make a rule that prohibits selling a stock for a price lower than the last trade. We’d stop losses altogether. Everyone would make a profit. Unlike some of these other measures you’ve heard today, it wouldn’t cost taxpayers a penny. So, what do you think of the Cox No-Loss Sale rule?

Source:
The no-loss sell rule
What if we tried a new strategy in the next six months?
David Weidner
MarketWatch, 12:01 a.m. EDT July 31, 2008
http://www.marketwatch.com/news/story/heres-trading-rule-guaranteed-work/story.aspx?guid=%7BCAB604A7%2DDEEF%2D4DF7%2D9389%2D2B71BFB86436%7D

Category: Finance, Short Selling, Video

FASB: OK For USA to Turn Japanese

Category: Derivatives, Legal, Valuation

No Shorting. That’s the Rule.

Category: Short Selling, Taxes and Policy, Trading

Bank CEOs: I Said WHAT ?

Category: Corporate Management, Credit, Derivatives

Nozzle Rage

Category: Commodities, Consumer Spending, Energy, Psychology

Look Who’s Twittering: S.E.C.

Category: Legal, Web/Tech

Spiffy!

Category: Corporate Management, Derivatives, Earnings, M&A

Analysts Overstate Earnings Once Again

Category: Data Analysis, Earnings, Financial Press