So, where is that recession?
Not only did we not contract in Q1 like most had thought we would, we actually grew at a faster rate than we had previously been reported.
Gross domestic product rose at a seasonally adjusted 0.9% annual rate January through March, the Commerce Department said in the second estimate of first-quarter GDP. A month ago, Commerce said GDP increased 0.6% in the first quarter.
The best news? Inventories fell in the first quarter instead of rising as reported a month ago. Stockpiles of all goods shrank by $14.4 billion. In the original first-quarter GDP report, Commerce had said inventories January through March rose, up $1.8 billion; that estimate meant a GDP boost of 0.81 percentage point. While the revision led to a smaller GDP boost, it was a positive in a way, indicating businesses weren’t sitting on a backlog that could grow in the second quarter, swamp their shelves, and reduce GDP in that April-June period.
Short answer? Lean inventories mean that businesses and consumers are aligned in their purchases and large scale layoffs that would really hurt the economy aren’t likely to happen.
Evidence of this can be found today in the jobs report showing that the 4 week moving average for jobless claims actually fell by 2,000. It is going to be real hard to have a recession is unemployment does not rise substantially.
8 replies on “Q1 GDP Revised ………………………. UP!”
The recession is at Sears and Borders and most of retail, and real estate and banks and finance and in the automotive sector. I think the powers that be are trying to manage the downswing as best they can and given improvements in information technology it’s possible to do that to an extent, but right now it’s looking like a long slow grind to work out the excesses of the credit bubble and reestablish stability.
joe,
i agree.. i think we will stagnate for a while
“The value of a business is the present value of the cash you can take out of it over 50 years. You know, the next year is worth more in that calculation than the 50th year out.”
“One of the things I find interesting about retail stocks, for example, is that no one wants to own retail stocks if we’re in a recession or going into a recession, but if a business is worth the cash you can take out over 50 years, you’re going to have seven recessions. Why does it really matter, you know, you should really think more about what you’re paying versus what the business is worth. As opposed to what you’re paying versus what the business is going to earn next quarter.”
Bill Ackman 5/9/08
The upward revision has been forseen for awhile – this is not new news, just a confirmation of what everyone already knew. The revised number was exactly what was expected.
We are in a recession. Anyone that thinks otherwise is either incompetent or delusional.
Which are you?
— JD
JD,
based on the numbers…..neither,
just right……
you have been saying this for months now yet, the economy continues to grow
you are running out of time for the “end of days”
😉
Time will tell.
I never called for the end of days, but you have continued to say that there is ‘no’ recession and that is just so completely wrong I am forced to speak out.
It won’t be the end of days, but we are in… and there will be evidence to confirm… a recession.
I suppose you win Q2, but Q2 was mostly expected to be flat to slightly up anyways. Q3 will not be positive.
On the flip side… unlike earlier this year, there are now some decent bargains out there. Cash has been taken down to 32.5% of the portfolio with some stocks right on the cusp of being purchased.
The market will continue its fall soon enough.
jd,
true…you did not call for “end of days”, but it did have a nice ring…
we are in a dramatic slowdown, not recession. we have not had a single Q of negative growth much less 2 in a row.
like i said before, we will stagnate for a while….but not contract (recession)
With today’s 50% upward first revision to the Q1 GDP data, the likelihood of a recession is fading really, really fast.
It is probable that Q2 will show slower growth than Q1. But the best minds remain convinced Q2 will show positive GDP growth, every quarter of 2008 will show positive growth and 2009 will grow faster than that.
Once we get the final numbers for Q2 (9/26/08), we will be able to safely bury all this media hysteria in the ash pile of a very long, very sad history of media folly.
Fortunately, we’ll be able to bury the 2008 recession myth before the November election. Thus, the political ploy on the part of Dems will have backfired (big-time).
See my latest updates on this sorry media driven hysteria here:
================================
The Recession of 2008 That Wasn’t?
================================