Economists Upgrade Second-Half GDP Forecasts

[Benny B]

AUGUST 5, 2009 Economists Upgrade Second-Half GDP Forecasts
By SARA MURRAY

Economists are predicting a brighter second half of the year as the cash-for-clunkers program boosts spending and U.S. manufacturers ramp up their production.

Revisions began after last week's gross-domestic-product report, showing the economy contracted at a better-than-expected 1%. This week, the upward revisions have continued on hopes the government's auto stimulus program would propel consumer spending in coming months and force auto makers to make more new cars than previously planned.

Heard: Stock Market Runs With Aging Bulls Economists React: Consumers Still 'Missing Link' Econ: 3rd-Quarter Forecasts Get Stronger Meanwhile, the Commerce Department said Tuesday that consumer spending rose 0.4% in June. But adjusted for inflation, it fell 0.1%. Personal-income data also fell 1.3% in June, the largest single-month drop in four years.

The data indicated that consumers concluded the first half under intense pressure from a weak labor market. That suggests the anticipated GDP growth won't be enough to substantially bring down the unemployment rate.

Still, in the largest wave of upward revisions of GDP forecasts since the financial crisis began, UBS AG is now predicting 2.5% growth in the third quarter, up from 2%, and 3% growth in the fourth quarter, up from 2.5%. Wells Fargo & Co. also revised its third-quarter forecast to 3% growth, up from 2.2%. For the fourth quarter, it is now predicting 2.0%, up from 1.6%. T. Rowe Price Group Inc. increased its third-quarter projection to 2.75% from 1.3%.

Economists already had expected growth to rebound in coming months after companies drew down inventories in the first half of the year. A promising manufacturing report this week showed a jump in new orders and production, building on those expectations.

"When you combine leaner inventories with more sales, that's the fundamental reason for being more optimistic about at least the second half of this year," said Mark Zandi, chief economist for Moody's Economy.com. The firm revised its third-quarter forecast to 1.6% from 1.1%, and its fourth-quarter outlook to 2.1% from 0.2%.

[Benny B]

Bump for GDP news!

Where's "Bindare" and "Gigantor" to refute this with "secret info" that refutes analysts and economists from Wells Fargo, UBS, T. Rowe Price, and others? After all, these getbiggers have  Ph.Ds from Columbia, the University of Chicago or The London School of Economics, and conduct their own intensive quantitative analysis, no? 

[grab an umbrella]

Bump for GDP news!

Where's "Bindare" and "Gigantor" to refute this with "secret info" that refutes analysts and economists from Wells Fargo, UBS, T. Rowe Price, and others? After all, these getbiggers have  Ph.Ds from Columbia, the University of Chicago or The London School of Economics, and conduct their own intensive quantitative analysis, no? 

Since government contributes to GDP, and most of the bailout money hasn't been spent, is it a surprise that GDP will go up? 

[GigantorX]

Bump for GDP news!

Where's "Bindare" and "Gigantor" to refute this with "secret info" that refutes analysts and economists from Wells Fargo, UBS, T. Rowe Price, and others? After all, these getbiggers have  Ph.Ds from Columbia, the University of Chicago or The London School of Economics, and conduct their own intensive quantitative analysis, no? 

Never said I had "secret information" you fucking clown. While I am glad that people smarter than me are forecasting higher GDP growth in the 2nd half of the year....what fundamentals will it be based on?

Taking directly from the article I see that it will come from a govt. spending program and businesses rebuilding inventories because they are nearly depleted.

What the article doesn't tell us will happen is a rebound in consumer spending or even a jump in household incomes or a positive gain in employment. When looking in real current dollars, consumer spending dropped and personal income fell the largest amount in 4 years, add that with todays data that showed a larger than expected loss of jobs and this seems a temporary spike.

I'm as thrilled as you are about positive GDP numbers...but less than thrilled when they come from temporary replenishment of inventories and a temporary govt. program.

[240 is Back]

wow, so now large groups of economists are all conspiring together to lie to us?

The people who write "9300" oon the DOW scroll on tv... they're in on it too.

[GigantorX]

wow, so now large groups of economists are all conspiring together to lie to us?

The people who write "9300" oon the DOW scroll on tv... they're in on it too.

Do you not know how to comprehend the written word? Where did I say they were lying?

If you bothered to read my post you would see that I pretty much agree with the forecasts. But within Blanco's post you can see that it is due to replenishing depleted inventories and govt. spending.

The consumer is still down, the consumer is still not spending, the consumers income is still falling and the consumer is still losing his/her job at a higher than expected rate. Consumption completely drives our economy so until the consumer gains confidence and starts spending this will probably be a temporary spike.

I'm just going on what is presented in the article, nothing else.

[240 is Back]

yeah, i'm just ragging on the CTers.  I love a good CT, of course.  Obama said things would turn around late 2009, and now economists are starting to agree...

[GigantorX]

yeah, i'm just ragging on the CTers.  I love a good CT, of course.  Obama said things would turn around late 2009, and now economists are starting to agree...

Again, what does the article, that this thread is based upon, tell us?

Positive GDP growth for the 2nd half is based upon a govt. spending and businesses replenishing their nearly depleted inventories. What will happen once inventories are stocked and Cash for Clunkers expires?

Does this article say that the bounce will be based off of Job growth? No. Rise in personal/household income? No. Access to credit? No. Positive employment numbers? No.

Question: How much debt did this Admin. take on to spur this growth for the 2nd half?

[Bindare_Dundat]

Never said I had "secret information" you fucking clown. While I am glad that people smarter than me are forecasting higher GDP growth in the 2nd half of the year....what fundamentals will it be based on?

Taking directly from the article I see that it will come from a govt. spending program and businesses rebuilding inventories because they are nearly depleted.

What the article doesn't tell us will happen is a rebound in consumer spending or even a jump in household incomes or a positive gain in employment. When looking in real current dollars, consumer spending dropped and personal income fell the largest amount in 4 years, add that with todays data that showed a larger than expected loss of jobs and this seems a temporary spike.

I'm as thrilled as you are about positive GDP numbers...but less than thrilled when they come from temporary replenishment of inventories and a temporary govt. program.

I don't even bother anymore, Benny is as useful and annoying as  diarrhea.

[grab an umbrella]

I don't even bother anymore, Benny is as useful and annoying as  diarrhea.

I guess my post got skipped over.  Government adds to GDP, government has spent at best 20 percent of the bailout money.  Government will continue pouring more money in from bailout=higher GDP.

[kcballer]

More great news.  Interesting how 333 etc are so slow to move on good news like this...

[Soul Crusher]

More great news.  Interesting how 333 etc are so slow to move on good news like this...

Why dhould I comment on garbage?

The only reason there is increased GDP is because of govt spending, specofically, military spending. 

Incomes are still dropping and the UE is going up. 

 

[Soul Crusher]

More great news.  Interesting how 333 etc are so slow to move on good news like this...

[GigantorX]

More great news.  Interesting how 333 etc are so slow to move on good news like this...

Did you bother to read the article objectively? As stated the GDP growth is for the 2nd half and 2nd half only and is due to a Govt. spending program and because of businesses replenishing inventories. The replenishment is not due to high sales etc, it is due because businesses haven't bought inventory in a very long time because the economy is in very rough shape. No demand, no sales= no need to continually stock inventory.

The article states nothing about a sustainable GDP growth or recovery. Why? Well, for the third time, the consumer is broke, U.E. is still mounting, household incomes dropped, again, at the largest % in 4 years. Credit is still tight and no-one is buying anything. And the ISM manufacturing index dropped farther than expected and is still well in contraction territory. Without the consumer, there will be no sustainable recovery, it's that simple.

So while the prediction, because that's what it is, calls for 2nd half GDP growth (I agree with this), the reasons stated aren't due to a job market recovery or anything else that is sustainable. So after that 2nd half of "growth", it will probably double dip right back down unless the points above are adressed.

[grab an umbrella]

Did you bother to read the article objectively? As stated the GDP growth is for the 2nd half and 2nd half only and is due to a Govt. spending program and because of businesses replenishing inventories. The replenishment is not due to high sales etc, it is due because businesses haven't bought inventory in a very long time because the economy is in very rough shape. No demand, no sales= no need to continually stock inventory.

The article states nothing about a sustainable GDP growth or recovery. Why? Well, for the third time, the consumer is broke, U.E. is still mounting, household incomes dropped, again, at the largest % in 4 years. Credit is still tight and no-one is buying anything. And the ISM manufacturing index dropped farther than expected and is still well in contraction territory. Without the consumer, there will be no sustainable recovery, it's that simple.

So while the prediction, because that's what it is, calls for 2nd half GDP growth (I agree with this), the reasons stated aren't due to a job market recovery or anything else that is sustainable. So after that 2nd half of "growth", it will probably double dip right back down unless the points above are adressed.

Can you stop it with all your logic.

[GigantorX]

Can you stop it with all your logic.

I'm just going on the numbers and what the article is giving me.

[grab an umbrella]

I'm just going on the numbers and what the article is giving me.

Well it's getting hard to live in la-la land when you use numbers and facts damnit.

[Soul Crusher]

I'm just going on the numbers and what the article is giving me.

KYBallsack also thinks Cap & Trade is a great thing along with the mandatory retro fit provisions of the bill.  

  

[Bindare_Dundat]

In the second quarter, the private sector shrank at the alarming rate of 3 percent. The only reason total GDP did not fall by more than 1 percent is that real federal expenditures and gross investment soared by 11 percent in the second quarter. Real state and local government consumption expenditures and gross investment increased by 2.4 percent.

This matters because government projects always add to GDP by how much they cost. If the government dug a ditch and filled it in, the expense for the digging and the filling would both count toward GDP. Whether a project is worth the cost -- or even needed at all -- is not considered. 

[GigantorX]

In the second quarter, the private sector shrank at the alarming rate of 3 percent. The only reason total GDP did not fall by more than 1 percent is that real federal expenditures and gross investment soared by 11 percent in the second quarter. Real state and local government consumption expenditures and gross investment increased by 2.4 percent.

This matters because government projects always add to GDP by how much they cost. If the government dug a ditch and filled it in, the expense for the digging and the filling would both count toward GDP. Whether a project is worth the cost -- or even needed at all -- is not considered. 

That's correct. Funny how the thread has gone completely silent...

[Soul Crusher]

That's correct. Funny how the thread has gone completely silent...

Just bring up Palin and you will see how much action we get over here.