The initial GDP estimate for Q4, 2012 came in at
-0.1%. Yes, NEGATIVE! 0.1%. And the economic world was shocked. Economists were shocked, commentators were
shocked and government officials were really shocked. It was in a word SHOCKING! This was truly an economic tremor, because no
one, absolutely NO ONE saw this one coming!
Shocking News? Really? |
Well maybe not everyone was so shocked. And just maybe you might know someone who may
have thought this was happening.
From my December 9, 2012 post “A Very Ugly Freight
Market”:
“The freight data is consistent with my forecast that the
economy is bouncing between 0-2% GDP with no upward momentum. It
appears that we are falling to around 0% (the bottom of this cycle) at the end
of the year.”
The Freight
Market Doesn’t Lie!
The government economy gurus blamed the contraction on
“weather” and decreased government spending.
This is the equivalent of your brother-in-law telling you for the tenth
time why he can’t pay you the money he owes you. It all just sounds like blah, blah, blah,
blah at this point. It is however more
reassuring than “We are total morons and we have no clue what we are
doing. We are hoping things get better
soon, but don’t expect it. Check back
with us in three months and maybe we will be smarter then.”
While the government was claiming the number was not that
bad, some economists say the number could have been lower than -1.0% due to
changes in the GDP deflator. However the
trend has been to revise the GDP up from the first estimate, so it would not be
a surprise to see a final number around positive 0.3%.
What
Now?
The recent January economic numbers have been more
positive, so it doesn’t appear we are headed for the mini-recession that I
expected at the beginning of last year. It should be noted that no economist on
the Wall Street Journal panel forecasted a GDP lower than 0.9% just two weeks
ago. To all those economists who
forecasted 2% growth for Q4: You got some splainin’ to do! Here are the current 2013 GDP forecasts from
my economic panel (my 7 favorite economists from the Wall Street Journal
Panel):
Q1
|
Q2
|
Q3
|
Q4
|
1.2%
|
2.0%
|
2.3%
|
2.6%
|
This looks good to me and I think we can get to 3%in Q4.
(So does my favorite economist Jim Meil from Eaton at +3.1%)
Latest
Jobs Report
The economy generated only 157,000 in January. Some commentators had the audacity to say
this is positive news and a reason to be optimistic. Let me put this into terms anyone can
understand: this number is AWFUL. It is
TERRIBLE. It is ROTTEN. It is APPALLING. It is ABYSMAL. It is, okay my thesaurus ran out of words,
but you get the idea. Let’s put this
into perspective. If you fill Ohio Stadium with people and then add another
50,000 (half-filled again), that’s how many people went back to work in
January. But there are over 22 million
people looking for a “regular” full-time job.
At this pace the unemployment rate becomes a big issue in the NEXT
presidential election!
Since my last post on the problems measuring the total
unemployment rate, I learned about the SGS Alternative Unemployment Rate
calculated by Shadow Government Statistics that attempts to measure just
that. The SGS rate was at an all-time
high of 23.0% in January (unchanged from December). If this is true, it should scare the hell out
of us. The unemployment rate peaked at
around 25% during the Great Depression.
And President Obama just disbanded his “Jobs Council”? Somebody in the government got some splainin’
to do!
Model T Update:
Since we are in the mother of all 15 year s&p 500 head and shoulder formations I think the market will challenge but fail to exceed the earier tech bubble shoulder of 1527 in made 2000 the 2007 housing head of 1569 will not be surpassed and we will challenge the low of 666 set in March of 2008 Which was never fully retested at that time.
ReplyDeleteWrong on 1527 and maybe only a few days away from being wrong on 1569. There is an old saying that goes something like. The sea bottom is littered with wrecked ships all with rooms full of charts. :-)
DeleteYes, forecasting a number is difficult. The market finished today at 1551. The model has a 2% varience so 1580 may be the top.
ReplyDelete