Go to Jeff Salisbury LWGate Home Page.From: "Ricardo Bekin" <rbekin@hotmail.com>
Subject: Re: [CANSLIM] Worley's Weekend Weeview
Date: Mon, 4 Feb 2002 17:16:16 -0600
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Hi Tom, I wanted to thank you for putting together your weekly review, =
it's really great
on the topic of GDP, there are two things that bother me and I have not =
seen them mentioned anywhere
first, the .2% number that got widely quoted is real GDP, of course
the thing that bothers me is that last quarter nominal GDP actually =
dropped, the reason real GDP was up is that the GDP deflator dropped =
(mainly a result of energy price declines, I am sure)
and how frequently does that happen? since 1946 (the start of quarterly =
data) the GDP deflator dropped fewer that 1/2 a dozen times, the last =
time was in the early 50s! so what we are seeing now is VERY rare
the risk is that the GDP deflator may get revised to a more "normal" =
number, and that by itself will change the plus to a minus
the other problem:
spending on "motor vehicles and parts" increased from $361.5 billion =
(real) to $419.2 billion, obviously as a result of the incentives being =
offered in November
without that increase, real GDP would have been $9257.9, and the 0.2% =
would have been a -2.2%! (I know that is not strictly correct because if =
the money had not been spent on autos, a large part of it would have =
been spent elsewhere, but you see my point)
Ricardo
not an economist
----- Original Message -----=20
4th qtr GDP surprised most by increasing 0.2% annualized, instead of =
the expected 1.1% drop. Unless later revised to a negative #, this means =
by traditional measures we never went into a recession (and remember I =
suggested that possibility about 3 months ago!!). And, of course, the =
experts at the Nat'l Bureau of Economic Research says this doesn't =
change their opinion one bit that we went into recession in March when =
growth slowed. One contributing component was another sharp drop in =
inventories.
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<BODY bgColor=3D#ffffff>
<DIV><FONT face=3DArial size=3D2>Hi Tom, I wanted to thank you for =
putting together=20
your weekly review, it's really great</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>on the topic of GDP, there are two =
things that=20
bother me and I have not seen them mentioned anywhere</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>first, the .2% number that got widely =
quoted is=20
real GDP, of course</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>the thing that bothers me is that last =
quarter=20
<U>nominal</U> GDP actually dropped, the reason real GDP was up is that =
the GDP=20
<U>deflator</U> dropped (mainly a result of energy price declines, =
I am=20
sure)</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>and how frequently does that happen? =
since 1946=20
(the start of quarterly data) the GDP deflator dropped fewer that 1/2 a =
dozen=20
times, the last time was in the early 50s! so what we are seeing now is =
VERY=20
rare</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>the risk is that the GDP deflator may =
get revised=20
to a more "normal"</FONT><FONT face=3DArial size=3D2> number, and =
that by=20
itself will change the plus to a minus</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>the other problem:</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>spending on "motor vehicles and parts" =
increased=20
from $361.5 billion (real) to $419.2 billion, obviously as a result of =
the=20
incentives being offered in November</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>without that increase, real GDP would =
have been=20
$9257.9, and the 0.2% would have been a -2.2%! (I know that is not =
strictly=20
correct because if the money had not been spent on autos, a large part =
of it=20
would have been spent elsewhere, but you see my point)</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Ricardo</FONT></DIV>
<DIV><FONT face=3DArial size=3D2> not an =
economist</FONT></DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- =
</DIV><FONT=20
face=3DArial>
<DIV>4th qtr GDP surprised most by increasing 0.2% annualized, instead =
of the=20
expected 1.1% drop. Unless later revised to a negative #, this means =
by=20
traditional measures we never went into a recession (and remember I =
suggested=20
that possibility about 3 months ago!!). And, of course, the experts at =
the=20
Nat'l Bureau of Economic Research says this doesn't change their =
opinion one=20
bit that we went into recession in March when growth slowed. One =
contributing=20
component was another sharp drop in inventories.</DIV>
<DIV><FONT size=3D2></FONT> </DIV>
<DIV></FONT><FONT =
face=3DArial></FONT> </DIV></BLOCKQUOTE></BODY></HTML>
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