Friday, July 30, 2010

It Was MUCH, MUCH WORSE: BEA Revises Downward 2007, 2008, 2009 GDP Data

Most focus from the latest Bureau of Economic Analysis GDP data will be on the current slowed GDP number of 2.4%, but what is of further significance is that the BEA revised downward data for 2007, 2008 and 2009.

As Rick Davis at Consumer Metrics points out:
Apparently the "Great Recession" has been worse than our government has previously reported. And the recovery's brightest moment, Q4 2009, has been revised down from 5.6% to 5.0%. Similarly Q3 2009 dropped from 2.2% to 1.6%. And so on. The bottom of the recession was shifted back one quarter, with Q4 2008 now reported to have contracted at a -6.8% rate, revised down from the previously reported -5.4% rate. Most quarters of 2007, 2008 and 2009 have been revised down substantially, shifting the recession shown in the chart above back in time.
Again, this supports the thesis that economic data collected by the government is done in a very antiquated fashion. If they are still "revising" data from 2007, then what value can be put in current numbers (especially given the extremely limited value of GDP numbers in the first place).

Keep in mind that, while these revisions are going on, Rick Davis at Consumer Metrics Institute is measuring consumer durable goods activity in real time. Consumer durable goods is a much more important data piece than overall GDP since it is a very good indication of where the economy is relative to the business cycle (Climbing consumer durables indicates strong central bank manipulation of the economy, i.e. heavy money printing. Declining durable goods tends to indicate an economy adjusting away from a manipulated money printing "boom" period). This is all much more valuable and timely data for businesses and investors than the government data, and you get it in real time.

So where does CMI put things right now? Here's Davis again:

Our Daily Growth Index has dropped to new recent lows, and it is now contracting at a -3.4% rate.


  1. Between Henry Dent, Rick Davis and David Rosenberg it is obvious that without government intervention it would have been much worse however there seems to be a limit to the ability for the government to continue its intervention whether through quantitative easing or continued printing of unemployment checks. The reality is spending is contracting period. There is really no reason for it to expand in the short run (next couple of years at least). Keep in mind that much of the spending that did take place pre-2007 was in the form of Home Equity Lines of Credit which has totally disappeared and likely won't appear for at least 4 - 5 years minimum. That being said we are in a unreported depression even though the government would prefer for us to think we are in a growing economy which at the consumer (front line) level just isn't the case.

  2. The lies come from all directions as our leaders vainly try to justify the temporary salvation of an economic system that serves only the very wealthy.

    If the truth were known about the real nature of money, the charlatans that rent you your own credit would be arrested and prosecuted for crimes against humanity.

    If money were loaned at zero interest upon credit worthiness, there would be no reason for a penny in taxes. If a nation needs a bridge, print the money to build it and you will have a bridge as collateral. The "tax" would be the sweat of the persons (with good jobs) building the bridge, itself. The same for any public works.

    The funny thing is, most of the world's problems are blamed on lack of money, (if only we had the funds to do this or that) and money is truly in infinite supply. Our government-induced ignorance is the only thing keeping the supply valve closed.

    1. Outlaw usury.
    2. Structure loans to collateral lifetime.
    3. Prosecute psychopaths.

    Administering a loan is far less complicated than utility billing and should have similar cost. Without the ability to charge interest (or usurious fees,) there will still be honest work for bankers, just no unearned profits.