Q4 US GDP, some further thoughts

I will touch on some of my views regarding the significance of all this in a later post and there is a disturbing significance.

Q4 US GDP (provisional estimate) was helped by a) an increase in personal consumption expenditure that may have more to do with earlier weakness than a strengthening trend, b) a continued rise in inventories and c) a significant increase in net exports (close to 40% of the increase in GDP). 

Gross fixed private capital investment was weak and the strength seen in non residential non structure fixed investment looked to be more a rebound from earlier weakness.  There was also weakness in residential construction, that would look noteworthy if confirmed in subsequent revisions and in the next quarter:

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Trade data remains the most interesting point in the provisional data:image

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The strength of US data appears highly influenced by oil imports, in particular, November 2013 saw the lowest crude oil imports on a monthly basis since February 1997: 212,742 barrels down from 242,423 in October 2013, 242,956 in November 2012 and 264,770 in November 2011 – Census Bureau.

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But their is no denying the improvement in exports, and on a global basis:

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…the picture looks to be skewed by US data:

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Nevertheless, global economic demand is important and the uptick in world trade may be something that people are hanging on to with greater emphasis.  Note the following comments from recent Markit Economics reports:

Global manufacturing continued to expand at a robust pace in January, with growth easing only slightly from December’s recent high. However, the divergence widened between the performance of developed and emerging countries.

Worldwide PMI™ survey data signalled an increase in goods exports for a seventh straight month in January, indicating that the upturn in global trade flows seen late last year has persisted at the start of 2014. However, a widespread weakness of exports from emerging markets reveals how the upturn is being largely concentrated in the developed world.

Recent US ISM manufacturing showed a sharp drop which is consistent with new orders data. And also note http://www.markit.com/assets/en/docs/commentary/markit-economics/2014/feb/US_new_orders_14_02_04.pdf

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And we have a strong inventory backdrop which would expose the economy to a higher risk of recession:

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And of course income growth remains a concern:

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And personal current transfer payments remain elevated:

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And in real and historical terms:

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Saving less, spending more, earning less:

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And a kind of weird view of the disparity between growth in profits and the growth in national income.

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Recent US ISM data was also on the face of it strong, but the trend even here is one of weakening relative strength.  I will touch on some of my views regarding the significance on all this in a later post.

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