GDP

GDP 5.7% in Q4 2009

This is the advanced Q4 GDP and it's a blow out. GDP increased 5.7% in Q4 2009.

Party on Garth! This is an advanced report, so there might be significant revisions. Recall Q3 2009 GDP originally came in at 3.5% and was revised down to 2.2%.

The acceleration in real GDP in the fourth quarter primarily reflected an acceleration in private inventory investment, a deceleration in imports, and an upturn in nonresidential fixed investment that were partly offset by decelerations in federal government spending and in PCE.

Just a little bit, investment is a blow out at 39.3% increase!

One must wonder how much of the business investment credit from the Stimulus, which was a 50% bonus depreciation, and allows a 50% write off on business investments in the first year, is the reason for this private inventory investment acceleration.

Volker: "We cannot rebuild the economy to the tune of 70 percent consumption or housing booms. It will just break down again,"

CNBC has an interesting news bit about something Volker said. First off, let me give kudos to AmericaBlog for first picking this up. In a meeting at the White House, the famed former Fed chairman basically said we need to rebalance the economy.  That to have a GDP where over half (well 70% give or take) is due to consumption is not sustainable long term.

The alternatives to help bolster future economic growth include boosting exports, applying innovative technology to green issues and improving the nation's infrastructure, Volcker said.

The former Federal Reserve chairman, who now heads the White House Economic Recovery Advisory Board, said Obama understands that "We cannot have so much consumption."

BEA U.S. Metro GDP maps for 2008

The Bureau of Economic Analysis put out a information release showing the GDP slowdowns of U.S. metro areas in 2008.

BEA GDP change for 2008

The dark blue is the biggest increase in GDP, the darker tan is the biggest decrease.

New statistics released today by the U.S. Bureau of Economic Analysis show that the slowdown in U.S. economic growth was widespread: 60 percent of metropolitan areas saw economic growth slow down or reverse. Real GDP growth slowed in 220 of the nation’s 366 metropolitan statistical areas (MSAs) in 2008 with downturns in construction, manufacturing, and finance and insurance restraining growth in many metropolitan areas. Growth in real U.S. GDP by metropolitan area slowed from 2.0 percent in 2007 to 0.8 percent in 2008.

Economist Stiglitz wants you to get over your GDP Fetish

We know you go home and stroke that GDP, salivating at the prospect of that magic number turning positive so you can deny all that is wrong with the economy...but Joseph Stiglitz just called you out:

Most governments make a fetish out of it. If you take one message out of our report, make it avoid GDP fetishism. The message is to encourage political leaders away from that.

So many things that are important to individuals are not included in GDP. There needs to be an array of numbers but we need to understand the role of each number. We may not be able to aggregate everything together.

The article cites examples, such as increased consumer debt contributing to GDP but not adding to economic output in reality.

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