Calculated Risk has another update about economists anticipating a sharp upturn in 2009:Q4 GDP. He quotes a Bloomberg survey.
Gross domestic product expanded at a 4.6 percent pace from October through December ... according to the median estimate of 74 economists surveyed by Bloomberg News. ... “Inventories are going to be responsible for at least half of the growth, if not more,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York.
MarketWatch found a set of even more optimistic economists, but this time the focus was on an unsustainable inventories boost. See my post The Inventories Blip.
Economists surveyed by MarketWatch are forecasting a 5.5% annualized increase ... "Although we anticipate a large rise in GDP, underlying growth is expected to be rather tepid, held down by declines in structures, government spending, and motor vehicle sales," wrote Peter D'Antonio, an economist for Citigroup Global Markets...
Most of the boost in the economy in the fourth quarter came not from sales of goods and services but from the adjustment in the inventories of unsold goods.
If you look at the flood of indicators coming in every week, you might notice a characteristic pattern in a large number of them.
Figure 1 — The characteristic shape of many economic indicators. Look at Housing Starts or First Amercian Core House Prices, for example, from Calculated Risk. The part outlined in red highlights the reverse (horizontally flipped) square root shape of the recovery.
Figure 2 — A reverse (horizontally flipped) square root symbol.
Now obviously you will be able to find a lot of graphs that don't look like Figure 1. Most notably, unemployment continues to rise and rise. This is the "jobless" recovery, or put another way, employment is a "lagging" indicator. Unfortunately, it will "lag the recovery" for many years to come. Eventually you will hear about a "New Normal" characterized by high jobless rates.
The 2009 4th quarter GDP number, which will no doubt be revised downward in future BEA updates, forms part of the short-lived comeback (a "V") in the reverse square root of Figures 1 & 2 before things flatten out (or deteriorate).
The American economy is unsound. Read 7 Things About The Economy Everyone Should Be Worried About. The "V"-shaped recovery won't last long. For the much longer term, see Japan.
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