Big Upward 3rd Quarter GDP Revision Expected; Only Thing Bigger Is Its Secrecy
Of course, the expectations game can be frustrating, and we won’t know for sure until the actual report is released Thursday at 8:30 a.m. But there appears to be remarkably good economic news ahead. Naturally, it is getting the barest of coverage from an Old Media business press corps that seems intent on talking the economy down.
First, a week ago Monday, MarketWatch’s Greg Robb, in an article entitled “Economists think U.S. can dodge recession,” said that “The economy grew at a 3.9% rate in the third quarter, and many economists expect an upward revision above 4.5% when the government revises the data on Nov. 29.”
Then, at MarketWatch.com yesterday, (”Dollar under pressure as credit fears loom”; link requires free registration), reporter Lisa Twaronite got this quote from an industry expert:
“Even though the early indications from the weekend U.S. retail sales were not as poor as feared, and [third-quarter gross domestic product] is expected to be revised significantly higher later this week, the anticipation of more write-downs and losses related to the leveraged lending-subprime and otherwise-the credit-crunch to undermine growth in [the fourth quarter] and early 2008 weighs on the dollar,” wrote currency analysts at Brown Brothers Harriman.
Then there was this tidbit in the Wall Street Journal on Tuesday (link requires subscription). You would have no idea from the WSJ article’s headline (”How Rio Tinto Defensive Moves Could Make BHP Billiton Blink”) that this is coming. It starts the third of three items that originally came from behind the subscription wall at BreakingViews.com:
Credit Markets
In normal times, a U.S. recession would be a distant prospect. The biggest piece of economic data this week is the revision of third-quarter U.S. GDP growth rate, probably to a far-from-recessionary 5%. But these are not normal times.
If (emphasis “if”) Thursday’s actual result is 4.9% or higher, it will be the best GDP growth since the third quarter of 2003, and the second-best since the second quarter of 2000. See for yourself.
Chances are almost overwhelming that you haven’t read about the predicted GDP revisions anywhere, because this Google News search on [US revised “gross domestic product”] (typed as indicated, for date range of November 19-27) shows that the predictions aren’t being carried, or, as with the stories noted above, they are buried in otherwise downbeat reports.
As Larry Kudlow has often said (latest example here), it’s the “Greatest Story Never Told.”
Cross-posted at NewsBusters.org.
I think you touched on it before, but regarding manufacturing in terms of dollars or GDP I believe is larger each year despite the falling number of jobs employed by those manufacturers due to automation. Can you confirm that? Any links? We keep hearing the meme that America’s manufacturing base has shrunk, but is that really true? Just because one is making less cars than before doesn’t mean we aren’t making more of something else which may offset the value lost.
Comment by dscott — November 27, 2007 @ 4:56 pm
Here are some charts to answer my question:
http://www.newyorkfed.org/research/directors_charts/pi_10.pdf
http://www.newyorkfed.org/research/current_issues/ci12-2.pdf
http://www.bts.gov/publications/national_transportation_statistics/html/table_03_04a.html
The best one is this one from the BEA itself, you can choose the range of dates, but it clearly shows that manufacturing is not in decline in the US, on the contrary, it’s on the upswing in terms of dollars.http://www.bea.gov/industry/gpotables/gpo_action.cfm?anon=58578&table_id=19018&format_type=0
Therefore the only real conclusion is that declining manufacturing in the US is a myth based on the false notion that employment is proportional to output.
Comment by dscott — November 28, 2007 @ 12:54 pm
#1 and #2, I am sorry. I meant to get on this sooner, but got tuckered out. The magic post I have done is here:
Myth Busted: ‘Deindustrialization’
http://bizzyblog.com/?p=5647
Your stuff is very good too.
Comment by TBlumer — November 28, 2007 @ 1:25 pm
I think we need to make a concerted effort in busting this myth everytime it is raised by the Dems. This is one of their major economic arguments used against free trade or global trade to promote protectionism or blame China & Walmart for cheap labor. As usual, their argument is a false assertion under the guise of being for the working person. Given the concentration of their union supporters in the industries bleeding jobs to productivity gains and outsourcing, it needs to be repeatedly pointed out that when unions inordinately demand higher wages and benefits than ecomonically sustainable, they themselves open the door to automation.
The auto industry is a prime example of this: http://www.automotivesupplier.org/Industry%20Economic%20Paper.pdf
relatively steady figure of 12 to 13 million vehicles per year produced since 1994. Yet the number employed continues to drop (17% since 2000) see page 3 of 20.
Comment by dscott — November 28, 2007 @ 2:34 pm
#4, I agree completely.
Comment by TBlumer — November 28, 2007 @ 3:29 pm