Right, government doesn't manipulate or put false data out there; easiest case in point, the Birth/Death model. Who wants to explain the gains in the financial activities and construction areas that showed up in that report over the past 2 years? Is there a Lost and Found area somewhere in the universe to find M3 ?
Inventory slashing could be failing to replenish stock. Failing to replenish stock could be because of higher sales or lower production. Anybody know the latest production numbers off hand? Increased savings = less default. Reversing the trend of spend more than you have. I think it's bullish to a point. Too much savings is of course bad for the economy but I don't think we're there yet. Unemployment will continue to rise for some time. The economy will be in positive growth before unemployment ceases to rise due to it being a lagging indicator. Why would companies hire before they know business is improving?
Yes...-1% is an improvement over -6.4% in my books... The point you are missing here is the TREND. It is getting worse at a slower pace, but assuming the trend continues, we will be in positive territory before long.
Yes. GDP = C+I+G. So why are you trying to evaluate GDP as C+I? Government spends to increase G while C and I are low. Once C and I increase, government decreases G. It's not a fool proof theory, but the logic makes sense. If government didn't spend, GDP would in larger negative territory, and the same people complaining about government spending would be crying for the government to do something.
Exactly. And the market is already discounting the eventual turn into positive territory. That's what markets do.
Landis, I'm with BLSH here. Can you explain how an increased savings rate like this is bullish to a market depending on that consumer to spend spend spend in the future?
That's why GS is expecting S&P 1070.00 by years end, because market has "priced in" already "sluggish growth". LOL !
I'm not denying the fact government sometimes manipulates data, but too many bears use it as an excuse to discredit any good news. Bears should consider the fact that just maybe, the economy IS improving! Of course I could be wrong, by all means it has happened before. But that would also mean all of the governments around the world that are seeing improvement are also wrong, IMF is wrong, etc. Again, wouldn't be the first time these people are wrong, but odds are against it.
Excellent point. This was certainly true as of the end of June, where the CP market shriveled to $1.15 trillion outstanding - - - the lowest since November of 2000. However, it is possible that the CP market is not being used as much by corporate CFO's in lieu of longer term financing. http://econompicdata.blogspot.com/2009/06/commercial-paper-market-is-dying.html Ugly chart for sure.
Absolutely correct. As soon as the market realized the entire financial system wasn't going to collapse and bring down the economy with it, it began to go up, discounting a recovery at some point in the future.