Friday, January 29, 2010

..........Growth?

U.S. Economy Grew at Fastest Pace in 6 Years Last Quarter
The United States economy grew at its fastest pace in over six years at the end of 2009, but a sluggish job market is still souring economists on the sustainability of the recovery.

Gross domestic product expanded at an annual rate of 5.7 percent in the fourth quarter, well above analysts’ expectations. It had grown at an annualized rate of 2.2 percent in the previous quarter. Analysts had forecast annualized growth of 4.8 percent in the quarter, and the better-than-expected result sent stocks higher when trading opened on Wall Street.

“It was excellent report, but it’s not clear how sustainable this pace of growth is,” said John Ryding, chief economist at RDQ Economics. “We need numbers like this for the next two years, and I just don’t think we can achieve that.”
What the hell? 5.7%? That's like... a real number. The kind of number you need to see to start believing we might actually stave off of our impending dystopian hobo future. Things are looking good. No, things are looking great. Gentlemen, dust off the spats, shine up the monocle, order that gold toilet you've been eying, and... wait, I found the rainy cloud for this parade.

Seems that the reason for the growth is that businesses were replenishing stocks and inventory that had been allowed to dwindle because of the recession. Actual growth, not taking into account this unsustainable blip, was 2.2%. I think the phrase of the day you want to learn is: "inventory bounce". Why are some economists looking at this 5.7% number, looking at the inventory bounce/blip and saying "...ehhhhh"? Well because other economic indicators are poor, namely the jobs market.

Once again we've learned one of the fundamental lessons of this recovery: as long as you are an abstract number representing our economy and not someone actually living within the economy, things are looking good for you.

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