GDP Continues to Freefall.
by Lou Scatigna
The U.S. economy contracted by a more than expected 6.1% in the first quarter. Economists surveyed expected a drop of only 4.6%. The steep drop in economic activity follows a slightly larger 6.3% GDP decline in the 4th quarter of 2008. The huge back to back declines were the largest in 60 years as it becomes apparant that the recession is far from over. Since 1947 the economy has not contracted more 4% in any back to back quarters.
Weak investment in housing and dramatic drop in inventories offset a 1.5% increase in comsumer spending (the bright spot). Companies aggressively cut workers and curtailed production in the quarter. The savings rate rose to 4.2%, the highest rate sine 1998.
Exports fell off a cliff, down 30% the most in 40 years as our trading partners, especially in Japan and Europe,experience recession in the economies.
Surprisingly, inflationary pressures rose in the first quarter according to GDP price guages. The PCE price gauge excluding food and energy rose 1.5%, after increasing 0.9% in the fourth quarter.
Second quarter GDP estimates will have to be lowered based on these numbers. The economy still has some very strong headwinds to deal with.
by Lou Scatigna
The U.S. economy contracted by a more than expected 6.1% in the first quarter. Economists surveyed expected a drop of only 4.6%. The steep drop in economic activity follows a slightly larger 6.3% GDP decline in the 4th quarter of 2008. The huge back to back declines were the largest in 60 years as it becomes apparant that the recession is far from over. Since 1947 the economy has not contracted more 4% in any back to back quarters.
Weak investment in housing and dramatic drop in inventories offset a 1.5% increase in comsumer spending (the bright spot). Companies aggressively cut workers and curtailed production in the quarter. The savings rate rose to 4.2%, the highest rate sine 1998.
Exports fell off a cliff, down 30% the most in 40 years as our trading partners, especially in Japan and Europe,experience recession in the economies.
Surprisingly, inflationary pressures rose in the first quarter according to GDP price guages. The PCE price gauge excluding food and energy rose 1.5%, after increasing 0.9% in the fourth quarter.
Second quarter GDP estimates will have to be lowered based on these numbers. The economy still has some very strong headwinds to deal with.
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LOL! Bad news is good news! Stocks will soar on this bad news as they have since March! Greatest bull market in history!!
ReplyDeleteEVERYONE should buy stocks now!
We have reached Nirvana!!!!!!!