Posted on 01/30/2009 2:05:29 PM PST by NVDave
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 3.8 percent in the fourth quarter of 2008, (that is, from the third quarter to the fourth quarter), according to advance estimates released by the Bureau of Economic Analysis. In the third quarter, real GDP decreased 0.5 percent.
(Excerpt) Read more at bea.gov ...
The numbers inside are pretty grim, and show demand destruction for even such non-discretionary things as food, we well as showing a collapse in consumer inflation.
Savings is suddenly popping up as consumption is going down, durable goods orders are collapsing, etc.
There is no good news inside this report. Zippo.
If people want to know why McCain lost the election, the details are in this report, plain as day. People vote their pocketbooks, and people's pocketbooks were not happy in Q4.
Well, a broker once told me when news is all gloomy, the bottom has arrived. This week would certainly seem that way.
If you spend a year telling everyone in the MSM and rest of idiots that voted for you (Obama), what the hell do you expect? It appears that the bounty over which you sought control has been stolen by your constituents already.
Well.
Now it is official.
We have two quarters of negative growth.
The recession is now. Who is President?
Barack Obama
It is all your fault President Obama.
That “contribution” due to idle inventory means that it will have to be reflected in lower GDP in future quarters. I doubt January’s rounds of layoffs will be enough to absorb that additional downward pressure. It shaping up to be an ugly Q1.
Who freakin cares anymore? The government figures for the last 50 years have been nothing more than a sham. WHO CARES? They lie, they die. Nothing is Hoyle anymore. Inflation? Just wait. Durable goods? Just wait. I have a 50,000 SF building I am going to fill with new refrigerators, washers and dryers, dishwashers, dehydraters, pressure canners, canning supplies and then supplement my customers with 150 acres of produce they can process and survive. My turn. I’ve suffered long enough.
That is a statement of fact. Many here can't see it, thinking only in political terms. A strong conservative candidate MIGHT have galvanized the base, the way Palin began to do, but in the end people were going to vote against Bush's party because, "It is STILL the economy, stupid!
So, I wonder how many people still think this will be a typical 18 month V-shaped recession followed by a strong recovery. Some in the media are just starting to pick on the likelihood that all of 2009 will be very hard with a stagnant or contracting ecnomy, more layoffs and bankruptcies and contracting GDP.
Oh, there are still lots of folks here who link to the Fed’s historical GDP chart to try to argue that everything is fine because real GDP growth will be at an average 3% clip during this period. I’ve also noticed that those are the same folks that in Oct/Nov were saying that you should be buying stocks because by Q3-09 the economy will be roaring back, and many are now saying that perhaps it might take a little longer.
The recession was “official” when the NBER called it.
The key here is consumers. Since consumers became 70% of the GDP, and the economy became dominated by “service” sector activity, the economy of the US has rested upon consumers consuming. And in many cases, consuming utterly nonsensical goods and services.
Look down inside the report and see how consumers are now saving - savings jumped up: “disposable personal income less
personal outlays — was $310.3 billion in the fourth quarter, compared with $130.8 billion in the third.”
That’s big. Very big.
Retail sales of final domestic product dropped 5.1%. Again, big.
Consumers have snapped their wallets shut. You could see this coming in prior GDP reports as employment and wages softened, which is what the NBER was looking at a year ago to call the top of the expansion. Credit has also ceased expanding.
There will be no rapid recovery. The Fed and Congress can’t (and won’t) be able to perform effective reflation of the consumer economy before real mindset change sets in. A huge hole has been blown into the “balance sheet” of Joe and Jane America - their 401k’s are taking, coupled with the equity in their house collapsing. They now realize that they must save for retirement - the old fashioned way. And when they do that, they cut back on consumption, which will lead to further job losses, which will lead us down the path of debt deflation, just as described by Irving Fisher in 1933.
We’re in a full bore debt deflation. No longer any doubt about it. The recent paper out of the NBER shows that, on average in the OEDC 12 countries, we’re looking at a six or so year recovery period. We’re also looking at about 7% more unemployment before we get to the bottom.
I agree.
Further, I think that the antics this week out of Geithner and the DNC-led Congress are telling the world that while they heard “Hope and change” - they’re about to get Smoot-Hawley all over again. The “buy American” provision in the “stimulus” package, coupled with Geithner’s remarks on the yuan.... what a bunch of amateurs.
It’s like the clown car just pulled up, all the occupants got out and now they’re using saws and hammers for surgery on some hapless bystander that they hit with their car.
I'm curious about something in the charts though: "Rental income of persons with capital consumption adjustment" What is that? It went up over 50% in 2008- obviously it's not simply rent.
Yeah, every time you hear “buy american” or “hire american” or anything at all about “currency valuations,” you just can’t help hear echoes of S-H.
Consumers will never be able to drive the economy as they have in the past. The wealthy have gotten wealthier by producing goods in China and elsewhere to sell in the U.S., and they have protected their racket by paying off politicians, academics, and media types.
The day of reckoning has arrived. There are not enough good jobs in America any more. American workers have no money left. People borrowed money to maintain the illusion of a middle-class lifestyle, and now they cannot pay it back. The golden goose has been bled dry.
This is what I find on the BEA’s website for your question:
I agree. I’m now of a mind that the day of reckoning is here.
The kicker for me is re-reading Fisher’s paper on debt deflations and just ticking off the predicted actions, in the order Fisher predicts. Complete, down-the-line conformance with how he describes debt deflations happening.
Thank you very much for finding that for me.
Yep. You got it.
Good summary. I confess to not really understanding the reports. My “feeling” was along what you’ve said but you are more precise and with conviction. It is interesting to note that we are now in a deflation, as opposed to disinflation. I’m not at all surprised. Like you found out, I’ve found that consumers have fallen off a cliff, and not with hardship. Most people are so saturated with new goods, most of us really won’t need replacements for our goods this year or even next. As a nation, we’ve been replacing out of fashion, convenience or to get a small upgrade in performance — all luxuries. Now that people are saving, they will make due with the old car, computer, cell phone.
I think you are right that in a few years people will begin to realize they were lied to and that “saving” is the most reliable way to get enough wealth to invest, and that $200/mo IRA contribution was never going to see the 15% returns they promised us in those free seminars.
I think the recession will last a solid 2 years, possibly more, and the recovery will be slow and stable.
Odds of inflation? I just don’t know but I am not counting it out. The spending for 2009 alone will be horrific. The LibDemComs can do this year after year after year.
Is Fisher’s paper on-line? Do you have a link?
Thank you,
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