Friday, July 31, 2015

7/31/15 getting panties tied in a knot over GDP inventory changes

Everybody gets their panties tied in a knot over inventory changes.  The media morons should start reported the two GDP data points below and do it on a year over year basis instead of quarter to quarter which terribly misleading.
This is not that bad.  And if a slight increase in interest rates derails the economy then there is something really really wrong.  I think the FED should come out and say they are going to raise interest rates 1% over the next two years and let the economy price that in.  Also, it will let the stock and bond market price it in.

Here is the last five quarter from the chart above which excludes inventory changes and net imports: 
2015:Q2:  2.7
2015:Q1:  3.0
2014:Q4:  3.0
2014:Q3:  3.0
2014:Q2:  2.3
This is looking good.
Here is the last five excluding just inventory from chart below.  This shows the slowdown in exports.
2015:Q2:  2.2
2015:Q1:  2.4
2014:Q4:  2.6
2014:Q3:  3.0
2014:Q2:  2.3

Five percent growth is an overheated economy.  It shouldn’t take that much to get the economy consistently at 3% plus but it isn’t up to the FRB, it is the job for congress.  However congress and the president are interested in social egalitarian ideology rather than jobs.

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