GDP?

by Larry Levin

GDP? What GDP? When the Gross Domestic Product was initially estimated months ago it came across the wire showing 2.8% growth and prior to that was 3.5%. Today's latest estimate was supposed to come in near 3.0%. It did not.

It was terribly worse than expected at just 2.2%. Year-on-year, real GDP stands at minus 2.6%. Market reaction: yawn.

Bloomberg had this to say...

The recovery is not as strong as earlier believed. Real GDP growth for the third quarter was revised downward to an annualized 2.2 percent from the prior estimate of 2.8 percent. The market consensus had expected a 2.7 percent gain for the latest estimate. The revisions were primarily due to lower estimates for inventories. Also revised lower were government purchases, nonresidential fixed investment, residential fixed investment, and personal consumption. Net exports were revised up. Final sales were revised down to 1.5 percent from an annualized 1.9 percent.

Let's see here, the actual GDP growth is only 2.2% but was originally reported by the government as 3.5%. These are the same folks who claim not to lie about CPI calculations, or how unemployment is counted among many others. The so-called experts in the BEA (of the Commerce Department) missed calculated by a MASSIVE 59%! (3.5% - 2.2% = 1.3% error; 1.3%/2.2% = 59%!).

Was the original data reported at 3.5% because the folks at the BEA, like its friends of the BLS, are woefully incompetent; or was this just another government attempt to bulls#it the public and Fraud Street to pump up market gains?

What's more, if you subtract government spending - AND ONE SHOULD SINCE ITS SPENDING IS ACTUALLY THEFT OF ONE MAN ON BEHALF OF ANOTHER - you get a GDP reading somewhere near Z E R O!

With this revision we now have proof that the economy is not expanding at all in the private sector. Other than explicit government spending on things like "Cash for Foreign Automakers" and "Housing Down Payment Handouts" the private sector is still contracting.

So I have to ask again: GDP? What GDP?



Previous Day's Trading Room Results:

Trade Date: 12/22/09

E-Mini S&P Trades*
(before fees and commissions):


1) No "Secrets" trades were filled today.

2) Algorithm positions (3)

3) "Reading the Tape" positions (2) ...combined Secret's, Algo, & "Reading the Tape" total...+0.00



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