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Absent Inventory "Bounce" Is Reason For Japanese GDP Miss
The world's second biggest economy just posted a dramatic miss in GDP expectations, and demonstrated how tendentious "developed" governments can be when fudging numbers in volatile economic times. And the biggest reason for the divergence: the mythical inventory bounce, which based on preliminary estimates was supposed to generate a 4.8% GDP. Alas, inventories never "bounced" leading to a disappointing 1.3% reading. Is the US next in line for major GDP disappointment? Or do we have mid-term elections to thank for continued GDP fudging for at least the next 12 months?
Goldman highlights the divergence:
The sharp cut to inventories (contribution cut to +0.4 pp from +1.4 pp) was a factor behind the divergence versus the market consensus. Private capital expenditures were also revised down markedly, going from +6.6? growth in the preliminary estimate to a double-digit negative of -10.6%. Large cuts were also made to the public sector, with government consumption swinging into negative territory at 0.5% from +1.5%, and the decline in public investment widening to -6.3% from -4.9%.
A breakdown of the revised Jul.-Sep. GDP components shows that private residential investment (-28.1%; contribution of -1.0 pp) and capex (-10.6%; -1.5 pp) continue to be drags on private-sector demand but exports (+28.6%; +3.5 pp) and firm individual consumption (+3.8%; +2.3 ppt), driven mainly by purchases of consumer durables, underpinned the economy. The contribution from public demand moved into negative territory at -0.4 pp.
And the firm concludes with a very gloomy outlook on the land of the rising sun:
We expect GDP growth to approach zero from Oct.-Dec.: We think GDP growth from the Oct.- Dec. quarter through mid-2010 is likely to slow to nearly zero due to a fallback in consumption, which government stimulus revved up through the Jul.-Sep. quarter, and the partial suspension of the FY2009 supplementary budget. We expect this span through June 2010 when the DPJ-led administration is to begin distributing childcare allowances to be a soft patch without public policy support. If the yen stays at the current level of strength over this span, that would squeeze profits at exporters in manufacturing industries and create further substantial downside risks to the economy in terms of employment and wage reductions.
Certainly not good news to an economy which is gripped in deflation for a second decade running (and is a advance look of the troubles facing the US itself). And is this the first case of major downward revisions by economists and analysts? Will this optimism killer spill over into all corporate sectors? It is unlikely, as Wall Street's very survival (read bonuses) depends on perpetuating the hope myth for as long as possible. Even if numbers continue missing, analysts will merely extend and pretend, saying that once Amazon stops selling 2 kindles to every high school drop out in 2010, the company has an exponential and practically guaranteed growth pattern well into 2039.
h/t Hedged In
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Futures are not reacting at all to the news. Some minor blips, but nothing out of the ordinary. Kind of disappointing. I guess the interns at GS don't sleep.
Phil Gramm needs to tell them it's a mental depression.
US GDP numbers too are overstated. And Chinese GDP figures are 100% nonesense.
Has anyone been seeing all of the central planned construction going on in that country?
Check out this video from our friend's at Al-Jazeera (from November 9th).
http://www.youtube.com/watch?v=0h7V3Twb-Qk&feature=PlayList&p=06BD91A0CE5916D1&playnext=1&playnext_from=PL&index=30
Amen to all of that. Outfits like the IMF don't give away their gold.
As a small business owner in high tech manufacturing, I can tell you that there will be a big uptick in US high tech exports in Q4 (i.e. semiconductor equipment/automation etc.). This is largely due to a dry spell that goes all the way back to around March/April of 2008 and the recent weakness in the dollar. These are among the most productive and competitive industries (unlike healthcare for example) so I wouldn't expect much job creation. My company continues to see bookings through January/Feb but if I were to guess the main thrust of orders is already past.
That said I remain uber bearish on the overall US consumer led economy particulary financials and real estate.
The US will be last. First we have some major whiffs coming in Asia and Europe..
Perhaps the Japanese fudged the numbers down to further weaken the yen?
The entire global recovery is essentially a bunch of BS.
Nothing but a liquidity-fueled asset bubble (AGAIN!)
courtesy of your friendly central bankers.
The news section is not updating anymore ?
And despite this and far east markets falling, europe falling early on, the dogged US futures get pushed up by some unknown keen buyer and so lead the european follow the leader traders back up from the lows
Um, the latter: we have mid-term elections to thank for continued GDP fudging.
Off by only 369.2%. I don't see a problem with that. And I also believe one day the FED should drop interest rate to -5%. What a day that would be!
United annoucnes jobs program in form of plane builds yesterday. Today WSJ says over 25% of Boeing airline deals will be funded by the Ex-Im Bank
The U.S. Export-Import Bank mainly provides U.S. Treasury guarantees to banks to make them comfortable lending to buyers of American exports. No company has deeper relations with the bank than Boeing but some critics say the bank may be warping the market that is oversupplied with planes. Article is about the influence and practices of the bank as part of the WSJ's USA Inc. series.
Thanks for the insight. It's a smart move for United: retire older, less fuel efficient planes and borrow the money from the government at an historically low rate. Who cares if United goes under. The US taxpayer will cover it.
It's ok. It'll follow the farming route. Build a bunch of planes park them on the ground collect carbon credits for not flying them. You didn't think they would bother making new scams? Variations on a theme. Variations on a theme.
reverse repo purchase agreement cant hide the decline..
bls gdp numbers are criminal math made easy. I would love to take a nice short position with the data before us.. But its kinda hard to trade against the whopper our Joshua. Can we Just get the vix back up to 70. So I can put every option trade on for free.(vertical condors etc..) such bull shit
Thanks for forcing me to learn what tendentious means first thing in the morning.
Somehow I shall worm it into ordinary conversation several times a day for the next few weeks.
-MobBarley
Well,they can fudge the number all they want. But I thought this is the job of real economist;to extrapolite the real GDP from stats like payroll taxes,tax reciepts and the likes. Or we don't have anymore real economist?