We get our first look at how the economy really performed during the fourth quarter of 2012 today, as opposed to how it was presented in the runup to November’s general election and its aftermath.
The Associated Press just yesterday finally acknowledged that the economic consensus for today’s report is that it will show annualized growth of about 1%.
Here’s what I see in a last-minute review:
I’m rooting for an upside surprise showing genuine strength despite Obama administration obstruction, but fearful that we’ll see a downside shocker.
The report will be here at 8:30 a.m.
… Here’s that downside shocker (full release and tables):
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of 0.1 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent.
… The decrease in real GDP in the fourth quarter primarily reflected negative contributions from private inventory investment, federal government spending, and exports that were partly offset by positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased.
The downturn in real GDP in the fourth quarter primarily reflected downturns in private inventory investment, in federal government spending, in exports, and in state and local government spending that were partly offset by an upturn in nonresidential fixed investment, a larger decrease in imports, and an acceleration in PCE.
… The change in real private inventories subtracted 1.27 percentage points from the fourth-quarter change in real GDP after adding 0.73 percentage point to the third-quarter change. Private businesses increased inventories $20.0 billion in the fourth quarter, following increases of $60.3 billion in the third and $41.4 billion in the second.
The press excuses will probably be:
- “No big deal. It all had to do with inventories” — as if we’re supposed to be impressed with just over 1% growth if you ignore the inventory situation — which you can’t.
- “See what happens when cut government spending?” There’s a difference between government “spending” and “purchases and investment,” which the press either refuses to acknowledge or doesn’t understand. “Spending” has not decreased, even if purchases and investment have.
This is just awful. More later if I find anything else worthy of comment or others’ comments worthy of note.
UPDATE, 8:45 a.m.: Also expect undue attention to ADP’s Employment Report released earlier this morning which showed 192,000 private-sector jobs added so as to distract from the GDP report. That’s not bad, but as Zero Hedge points out, ADP’s track record vs. the government’s reports has been “lousy,” and the firm reduced last month’s private-sector additions by 30,000 from 215,000 to 185,000.