Dollars and Jens
Friday, July 31, 2009
Investment slowed down less quickly in the second quarter, and the headline GDP result was only a 1% annualized drop, but a lot of the good news here is a bit questionable. More than a point is added by government spending; net exports added more than another point, as imports dropped more rapidly than exports.
|I 07||II 07||III 07||IV 07||I 08||II 08||III 08||IV 08||I 09||II 09|
|Gross domestic product||1.2||3.2||3.6||2.1||-.7||1.5||-2.7||-5.4||-6.4||-1.0|
|Change in private inventories||-.61||.32||.19||-.63||-.21||-1.25||.26||-.64||-2.36||-.83|
|Net exports of goods and services||-.29||.66||1.36||2.24||.36||2.35||-.10||.45||2.64||1.38|
I guess in other contexts I've criticized the line of reasoning implicit in my last point, so let me unwrap something here: the fact that there was a big drop in imports, conditional on the other numbers reported here, means that more of the ongoing fall in spending by Americans fell on our trade partners and less of it fell on American producers. So I suppose as an isolated data point it suggests weak demand, but conditional on the rest of it it really does mitigate how weak American production is.
A few last points:
- Inventories continue to spiral downward; "final sales" were almost flat for Q2.
- The GDP deflator was annualized 0.2%. The subcategory deflators tend to be positive (i.e. inflation) for consumption categories and negative (i.e. deflation) for investment categories. Nominal GDP is still falling in this report.
- This is all a few months old, and subject to revision.
Update: I love Keith Hennessey's graphical representations of GDP. Simple but clear.