Data This Day Was More Positive

Is this more believable? Well, let’s look. GDP rose to 1% vs prior 0.7%. Is that correct? Well according to but that’s highlighted by the group we follow, Consumer Metrics Institute, it’s just fun with numbers and meaningless adjustments summarized below. The full report is here

Summary and Commentary

This report is mostly statistical noise, although some enduring patterns can be seen:

— The reported growth came largely from inventories and imports, both of which can be held hostage by rapidly changing commodity prices. The reported changes are greatly amplified by significant monetary revaluations to mostly smaller changes in the physical levels of trade and inventories.

— Consumer demand for goods was revised downward, as was fixed investment — by states, local governments and commercial investors. Any lingering growth in the consumer, commercial and governmental demand for real/physical goods is softening.

— Exports fell even further into contraction.

— Any residual growth in consumer spending for services is not discretionary — it is primarily a consequence of inexorably rising health care costs.

— Mean household real disposable incomes are not growing significantly — and median household real incomes are still down 4% relative to 2008.

— On the flip side of household ledgers, monies that are no longer being spent at the gasoline pump are mostly being saved. The savings rate is an indication that households are not particularly confident when looking forward. And — given stagnant incomes, international headlines and domestic political “fear, uncertainty and doubt” (FUD) — that confidence is not likely to improve over the next several quarters.

Even at face value, a 1% growth rate is fundamentally anemic. And looking deeper into the numbers, most of that 1% comes from the economic fog created by highly volatile commodity prices. So, despite an upward blip in the headline number, we see no particular reason to be cheering this report.