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Foj
Citizen
Username: Foger
Post Number: 1068
Registered: 9-2004
| | Posted on Saturday, April 1, 2006 - 1:41 am: | 
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This could truly suck.
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Today's final 4th quarter 2005 GDP report came in showing a 1.7% annualized growth rate for the quarter. Though this decline is concerning, the actual breakdown of contributions is even more concerning. The total increase in GDP during the 4th quarter was only $46 billion in chained 2000 dollars. (i.e., it was adjusted for inflation using the government-controlled BEA's own secret formula.)
Normally, consumer spending is 2/3rds of economic activity. This was not the case in the 4th quarter, however. In fact, personal consumption expenditures accounted for only $17.5 billion of that growth, or only 38%. The biggest contribution came from capital investment (overinvestment?) The total gross private domestic investment was $72.5 billion, or over 4 times as much as consumer spending. Of this investment, $51.2 billion is accounted for as increase in private inventories. In other words, $51.2 billion of the contribution to that $46 billion came from unsold goods (surplus.) With a GDP growth as low as it was, and an increase in unsold goods greater than the GDP increase, there are no signs that this is an economy that is "strong, and getting stronger." Producing 4 times more goods than Americans can purchase is a recipe for disaster. Since American consumers account for 80-90% of the purchase of American goods, this is especially concerning.
From-
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132 x2543400
based on -
http://www.bea.gov/bea/newsrel/gdpnewsrelease.htm
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cjc
Citizen
Username: Cjc
Post Number: 5475
Registered: 8-2003
| | Posted on Saturday, April 1, 2006 - 3:26 pm: |
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A lull to be sure. Corporate profits were strong, and I think the GDP number for 2005 will still be good. Anticipated growth for first quarter 2006 is 4.5%. |
Foj
Citizen
Username: Foger
Post Number: 1072
Registered: 9-2004
| | Posted on Saturday, April 1, 2006 - 4:42 pm: |
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Large inventories could be a harbringer of recession, and lead to more layoffs. Bond & housing markets maybe pointing the same way.
Strong productivity gains and subdued wage growth boosted before-tax profits to 11.6% of national income in the fourth quarter of 2005, the biggest share since the summer of 1966.
Meanwhile, the share of national income going to wage and salary workers has fallen to 56.9%. Except for a brief period in 1997, that's the lowest share for labor income since 1966.
http://www.marketwatch.com/News/Story/Story.aspx?guid={C4257910-8351-437A-8C00-E4CF3B782091}&siteid=mktw&dist=
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