Courtesy of Mish.
Inquiring minds are digging into the 4th Quarter and 2012 Annual GDP Advance Estimate.
Heading into the report, the WSJ Economists’ GDP Forecasts were
+1.6% for Q4 2012 and +1.7% in Q1 2013.
“Shocking” Contraction
The GDP report was a shocker, coming in at an annual rate of negative 0.1%.
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of 0.1 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent.
Choice Comments From Consumer Metrics
Rick Davis at Consumer Metrics had some choice comments via email (also in the preceding link).
We have mentioned before that the BEA is notoriously poor at recording turning points in the economy in “real time.” The first quarter of 2008 was a classic example, initially being reported in “real time” as yet another quarter of sustained growth before being revised downward several times over some 40 months to become the first quarter of contraction leading into what we now call the “Great Recession.” We fully expect that ultimately the surprising economic upturn seen in the 3Q-2012 data will largely vanish in future revisions.
It is hard to look at these new numbers without at least some cynical thoughts about the reported numbers for the prior quarter. We were frankly astonished when the final numbers for the third quarter came in at a 3.09% “full recovery” growth rate, driven largely by unexplained increases in Federal spending, particularly in the Department of Defense (DOD) — the timing of which was completely controlled by an Administration in serious need of positive pre-election economic headlines. The annualized rates of growth for defense spending rose to over 15% in 3Q-2012, only to magically reverse to a -15% annualized contraction rate in 4Q-2012 — after the polls had closed.
To that last point: arguably the DOD was simply moving materiel acquisitions forward in anticipation/avoidance of “fiscal cliff” sequesters, with the economic impact of the contracting binge a mere side effect of bureaucratic hoarding. We should all hope that the context of any such timing shenanigans were more budgetary than political in nature.
Real GDP
Inquiring minds may want to further investigate the above comments, with a look at actual BEA data from the top link.
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