November 24, 2009

Oops: 3Q09 GDP Growth Revised Downward to an Annualized 2.8%

Filed under: Economy,Taxes & Government — Tom @ 9:53 am

A lot of people thought this might be coming:

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.8 percent in the third quarter of 2009, (that is, from the second quarter to the third quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 0.7 percent.

Since the third quarter of last year, the first full quarter of the POR (Pelosi-Obama-Reid) Economy, the economy’s net shrinkage has been 3.1%.

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UPDATE: No matter where you go, the POR Economy follows (sources: 3Q09 advance; prior quarters)–

GDPprivateInvestment1Q08to3Q09

IBD noted that capital is on strike in early March, but as seen above, it really started in the third quarter of last year.

This is why it began when it did.

Today’s release shows that the strike continues to a greater extent than originally estimated. Take away Cash for Clunkers (a +1.6% impact the government crows about), the +0.87% inventory build-up (is it slow sales or perceived increased demand?), the effect of the Homebuyers Credit, and the juice to personal consumption due to increases in government transfer payments, and you’re in negative sustainable GDP territory. Positive GDPs attained in the manner of the third quarter can’t be repeated indefinitely without deadly serious long-term (all too quickly turning into short-term) consequences.

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UPDATE: At the Corner (HT Joe C. via e-mail), Veronica de Rugy weighs in –

In the end, what the numbers are saying is that government spent tons of our money and didn’t get much in terms of true economic growth. When the government stops pumping cash into the system, things are likely to look pretty bad.

UPDATE 2: Talk about lose-lose — Geraghty via Captain Ed at Hot Air says that the revised C4C contribution to GDP growth was only 0.81%.

I think that still puts GDP without the government steroids in negative territory but just barely. And though it’s possible that C4C caused a swing in GDP of 1.6% (i.e., from -0.8% to +0.8%), that was a lot of time, money and effort for not a lot in the way of sustained results.

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5 Comments

  1. [...] Bizzyblog: Oops: 3Q09 GDP Growth Revised Downward to an Annualized 2.8%: Since the third quarter of last year, the first full quarter of the POR (Pelosi-Obama-Reid) [...]

    Pingback by A little touch of Harry in the night. « Temple of Mut — November 24, 2009 @ 11:59 am

  2. Any so called growth due to government borrowing or tax credits is essentially smoke and mirrors accounting. Using freshly printed money does not contribute to growth of GDP, that’s putting the cart before the horse and contributes to inflation. Tax credits are merely a shift of ledger entries, since the government has to print replacement money to make up for the lost tax receipts to pay for spending. IF the government were actually cutting spending below revenues, then they might have a case for sustainability. We all know that’s not going to happen in the immediate future.

    Comment by dscott — November 24, 2009 @ 12:48 pm

  3. That was the second of three numbers for the GDP, now for the final number. Any takers on another downward revision…say to 1.5%?

    Comment by dscott — November 24, 2009 @ 6:52 pm

  4. Unsustainable indeed, the GDP fraud has been exposed:

    http://theblogprof.blogspot.com/2009/11/ap-economys-rebound-not-as-strong-as.html

    I told you so.

    Comment by dscott — November 24, 2009 @ 7:05 pm

  5. #3 and #4, it’s not that unusual to have a big change between version 1 and version 2, BUT it’s usually inventory related, which this one was not. It’s relatively unusual to have a big change between v2 and v3. I’m thinking 2.5% – 2.9%.

    Comment by TBlumer — November 24, 2009 @ 7:41 pm

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