July 29, 2010

Reuters 2Q10 GDP Growth Consensus Estimate: +2.5% Annualized

Filed under: Economy,Taxes & Government — Tom @ 1:14 pm



Additional noteworthy items at the link:


“We estimate real GDP grew at a below-consensus 2 percent pace in the second quarter. The report should feature solid growth in domestic demand but substantial trade drag and little if any boost from inventory accumulation.”

“The economy entered the second quarter with plenty of momentum, but exited with very little. We expect that growth in the third quarter will be slower than in the second.”

Looking back: Three months ago (April 27-28 meeting) an “upbeat” Fed predicted full-year growth of 3.5%.

With 1Q10 at 2.7%, 2Q10 at 2.5%, and 3Q10 lower than 2Q10 (say, 2.2%, which at the moment would seem to be optimistic), the fourth quarter would have to come in at something like an annualized +6.4% (factoring in compounding) for the Fed’s 3.5% prediction — again, about 90 days ago — to happen.

I don’t think so.

Related: From Zero Hedge yesterday —

Durable Goods Are Latest Economic Disappointment: June -1.0% Reading Is Largest Decline Since August 2009 (And Misses Consensus Of Course)

The June US durable goods order is the latest disappointment in a streak of poor macroeconomic data that started well over a month ago, and which will soon enough begin to impact not only GDP but also corporate earnings, as the macro double dip which is now firmly in place, makes it all too clear why companies have been miserly conserving cash. Durable Goods came at -1.0%, a major disappointment to consensus which had been hoping to a nice boost from the previous -1.1% number (now revised to -0.8%), and looking for a +1.0% reading. Better luck next time.

Sidebar: Something funny may be going on in manufacturing reporting. It will become clearer if this is or isn’t the case sometime next week. If it’s a legitimate possibility, you’ll see something here. If not, you won’t.



  1. Wait a minute, hasn’t the manufacturing index been above 50% for a while? How can we have minus 1% in durable goods? Something is not right here, I suspect a case of “animal spirits” sales gimmickery from the people who publish the manufacturing index.

    With the revised figure to -.8% from a + 1.1% makes me also suspect the government deliberately reporting higher than realistic numbers under the rubic they will get a self fulfilling prophecy of growth and then apologize (non apology-apology) later by revising the numbers as a matter of course. With this kind of shennagans going on, it makes the tracking of the economy problematical at best and worthless propaganda at worst.

    This brings me back to the fundamentals I have been looking at as a contemporaneous index of the economy’s strength: The distillate (diesel) consumption figures by the EIA. http://tonto.eia.doe.gov/oog/info/twip/twip_distillate.html#demand
    and the historical trend where the double dip is just on the cusp: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WDIUPUS2&f=W

    Comment by dscott — July 29, 2010 @ 8:42 pm

  2. #1, there is a bit of contrast between ISM and the Census Bureau, isn’t there?

    I have also noticed that revisions have tended to be downward in the govt’s data duirng Obama and were more often than not upward during Bush 43. I tend to attribute it to supply side tax cuts “surprising” people on the upside and stimulus disappointing people on the downside, and not the data crunchers fudging the numbers in anticipation of known revisions.

    Your mileage may vary.

    Comment by TBlumer — July 29, 2010 @ 11:17 pm

  3. [...] results is pretty much in line with predictions, as noted in this post yesterday, where the prediction was 2.5%. I saw another consensus prediction from Bloomberg that it [...]

    Pingback by BizzyBlog — July 30, 2010 @ 8:51 am

  4. Exactly #2, it’s also really easy to show growth over last year when in fact there was a contraction.


    The Commerce Department, in revisions issued Friday, estimates the economy shrank 2.6 percent last year — the steepest drop since 1946. That’s worse than the 2.4 percent decline originally estimated…

    …The revisions in gross domestic product, or GDP, now show zero growth in 2008. That compares with a 0.4 percent gain previously estimated.The economy also grew less in 2007 (1.9 percent) than earlier thought (2.1 percent).

    Given this information we now see that the so called Stimulus did not in fact have any positive effect but rather confiscate investment capital by the Treasury selling bonds to finance yet more liberal boondoggles with little to show for it other than signs announcing infrastructure projects. Had the money not been invested in Treasury Bonds, it would have been invested in the private sector which would have created NET tax revenue instead of huge tax revenue losses. If the Cuban model of employing 95% of the population were sustainable, then it would be the richest country in the world – its not by a long shot.

    BTW – Aversa who wrote the article while factually reporting the stats then spins the cause to be partially a result of … drop in state and local government spending.

    Comment by dscott — July 30, 2010 @ 9:32 am

  5. [...] mentioned at the end of this post last week that “Something funny may be going on in manufacturing reporting.” Well, not [...]

    Pingback by BizzyBlog — August 4, 2010 @ 6:41 pm

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