When all you read is gloom, turn here for a much different perspective.

Wednesday, April 29, 2009

Q1 2009 GDP Report: Finding The Silver Lining

Millan L. B. Mulraine, TD Securities
"There were some obvious glimmers of hope in the report as the improvement in consumer spending (which remains the lynch-pin of U.S. economic activity) during the quarter suggests that U.S. household spending may be on the rebound."

Sung Won Sohn, Smith School of Business and Economics
"The economy was not as soft as the GDP number indicated. Businesses stopped producing goods for a while slashing inventories by a whopping $104 billion. Without the inventory runoff, the economy would have contracted by 3.4% instead of 6.1% as reported. This is good news. With lean inventories, production will be cranked up in order to restock the depleted shelves in coming months."

Guy LeBas, Janney Montgomery Scott
"Consumers came out guns a’blazin... Personal consumption expanded at a surprisingly robust 2.2%, on the combined strength of greater demand for both durable and non-durable goods."

Richard F. Moody, Forward Capital
"The details of the first-quarter report suggest a much smaller contraction, if not a modest advance, in real GDP during the second quarter."

RDQ Economics
"The declines in both final demand and nominal GDP were much less severe [than in Q4]."

Nomura Global Economics
"If consumer spending stabilizes, a stabilization in capital spending would further improve the outlook."


  1. GDP did NOT fall 6,1% in this first quarter. That is scare tactics. It fell 1,4%. That's all.

    Annualising supposes things will continue as is, and THAT NOTHING WILL BE DONE ABOUT IT.

    That is what's wrong with all these predictions. They are only true if NOTHING IS DONE.

    MDs of Nobel Prizes should tell their patients, "unfortunately you are going to die" so they learn a lesson. Thanks to MDs something will be done, medically at least.

  2. Great Point Stephen. I too hate the reporting of an annualized number for the quarterly growth rate. It makes no sense. The quarterly number is more like 1.5%.

    But the silver linings are there no matter the number dressings...

    As always thanks for reading!

  3. GNE,

    Any concern that it will be revised downward based on a more detailed analysis of exports as was the initial Q4 2008 number? I suppose it could be revised upward as well.

  4. Anonymous,

    Yes, I would conclude that it will be revised upward.



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