EXPLAIN: How is economy in depression state with only -2.5% GDP

[empee]

http://www.bea.gov/newsreleases/national/gdp/gdp_glance.htm

If you roughly average the last 4 Quarters, its comes in at a annualized rate of -2.5% (rough estimate).

How can there be so much carnage.. when I look at public companies Year over year, nobody is down 2.5% or less (ie most companies are down around 10-30%).

Unemployment is almost 2x what it was 2 years ago.. but GDP is down only about 2.5%

How is this possible, and if its a scam where are the real #s.. and why do we care if GDP is tracking something else.

I just don't understand how such small GDP losses can cause this much carnage. This feels like at a minimum 10-15% of the GDP is gone.

 

[Emini Maestro]

The Fed decided to hide M3, so you will not get accurate answers to your question. The economy remains trending down, and will deepen in January 2010 following an abyssmal holiday sales season.

 

[psytrade]

I've been reading "the holy grail of macroeconomics" by Richard Koo.

http://www.amazon.com/Holy-Grail-Macroeconomics-Lessons-Recession/dp/0470823879

In it there are some ideas that parallel the current crisis as compared to Japan's lost years... Might want to take a look at it.

One of the main ideas is the concept of a "balance sheet recession" where demand for loans from borrowers sours big time... and no matter how low rates go, they're will be no demand increase for loans, thus extending and deepening the crisis.

 

[Emini Maestro]

Koo did a good job with those cases, and you're right, they are familiar. We failed to learn from the Japanese economy, which still has not recovered. Or more accurately, our leaders chose to obey their handlers and ram the US into the ground.

 

[gastropod]

There are none so blind as those who do not wish to see.

-gastropod

 

[Misthos]

They say the consumer is about 70% of the economy. One good way to measure consumer activity is through state sales tax revenues. This chart includes sales and income tax collected by states:

I think we're "manufacturing" economic activity elsewhere to make those GDP #s look better than they actually are.

 

[Martinghoul]

Answer is that it's partially due to stimulus and govt consumption...

 

[makloda]

Quote from Martinghoul:

Answer is that it's partially due to stimulus and govt consumption...

Bingo we have a winner. No conspiracy theories required.

 

[larrybf]

everything issued by the government is now total distortion and lies....nothing meaningful can be be extracted from crooks and con artists

 

[Misthos]

Quote from makloda:

Bingo we have a winner. No conspiracy theories required.

Obviously gov't spending and stimulus has impacted it. If anyone hasn't noticed govt spending they live under a rock.

But I think many people suffer from short memories. Which is something the govt loves.
Perception becomes reality.

How often do you see revisions for the better? Wasn't 2008 GDP .8 lower than initially reported? How often are unemployment numbers revised? Which way are they revised? Up or down? And now 3Q GDP was off? And they will also be adding some 800K to 2009 unemployment in early 2010.

How are we to know that the revisions have integrity? Humans are funny. Whether they work for govt, private sector, or research, when one conclusion is preferred, somehow researchers always deliver. Whether they work for Enron, the ratings agencies, climate research depts, or the CIA pre Iraq, they always find the intel that is desired, not the intel that exists.

Nope, no conspiracy or misinformation here. That only happens in places like Russia and China. We're different and sophisticated.

ROFLMAO