market-ticker.org / By Karl Denninger / January 30, 2013, 08:43
Real gross domestic product — the output of goods and services produced by labor and property located in the United States – decreased at an annual rate of 0.1 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent.
That will be the end of that.
CNBC is spinning like crazy, but it’s hard to spin this number. It sucks.
The decrease in real GDP in the fourth quarter primarily reflected negative contributions from private inventory investment, federal government spending, and exports that were partly offset by positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased.
The downturn in real GDP in the fourth quarter primarily reflected downturns in private inventory investment, in federal government spending, in exports, and in state and local government spending that were partly offset by an upturn in nonresidential fixed investment, a larger decrease in imports, and an acceleration in PCE.
Yes, the government was real. But the real inventory numbers are more meaningful.
“Buying” growth with federal spending doesn’t work. Rick Santelli is hammering on this and he’s right – this is a crap report and is underlining exactly what has been going on for the last several years.