That Bogus Quarterly GDP Wild-Assed Guess
Bill Quick

U.S. GDP Current Statistics (2006 to Present)

Advance – Most analysts’ don’t believe the astounding 4.0% growth estimate, and expect it to be revised downward in the next two revisions. The BEA based it on upturns in almost all areas from the severe downturn in the first quarter. The upturns were estimates in inventory investment, exports and imports estimates, based on just two months of actual data. Government and consumer spendingwas based on three months of data. Fixed investment including housing based on three months of data from durable goods report and auto sales, 

They’re estimating inventorie numbers.

And here’s what ZeroHedge has to say about tht:

GDP Deja Vu Stunner: Over Half Of US Growth In The Past Year Is From Inventory Accumulation | Zero Hedge

Back in December 2013, when everyone was expecting a 3% GDP print for Q1, we did a simple analysis concluding that “Inventory Hoarding Accounts For Nearly 60% Of GDP Increase In Past Year.” We stated that this “hollow growth”, which is merely producers pulling demand from the future courtesy of cheap credit and assuming the inventory will be sold off in ordinary course of business without bottom-line slamming liquidations or dumping, and which further assumes a healthy US consumer and global economy, is a flashing red flag for the future of US economic growth. In fact, we were one of the very few who warned that Q1 GDP would be a disaster: “The problem with inventory hoarding, however, is that at some point it will have to be “unhoarded.” Which is why expect many downward revisions to future GDP as this inventory overhang has to be destocked.

This is precisely what happened in Q1, however it was blamed on the “harsh weather.”

Alas, following today’s “spectacular” 4.0% GDP print following the predicted plunge in the US economy in Q1, we can again conclude that not only has nothing changed, but what we warned in Q4 of 2013 is about to happen all over again, and the inventory overhang (which incidentally was estiamted by the BEA and will certainly be revised lower next month) is about to slam future US growth.

So we should be getting the really bad news in October, just before the fall elections.

Bill Quick

About Bill Quick

I am a small-l libertarian. My primary concern is to increase individual liberty as much as possible in the face of statist efforts to restrict it from both the right and the left. If I had to sum up my beliefs as concisely as possible, I would say, "Stay out of my wallet and my bedroom," "your liberty stops at my nose," and "don't tread on me." I will believe that things are taking a turn for the better in America when married gays are able to, and do, maintain large arsenals of automatic weapons, and tax collectors are, and do, not.

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