{"id":406,"date":"2010-04-30T09:52:00","date_gmt":"2010-04-30T13:52:00","guid":{"rendered":"http:\/\/www.intuitiveinvestor.com\/web\/?p=406"},"modified":"2018-08-19T10:17:17","modified_gmt":"2018-08-19T14:17:17","slug":"first-quarter-gdp-numbers-are-in","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/04\/30\/first-quarter-gdp-numbers-are-in\/","title":{"rendered":"First Quarter 2010 U.S. GDP Numbers Are In"},"content":{"rendered":"

First quarter Gross Domestic Product (GDP) was up at an annualized rate of 3.2%.\u00a0 This compares to the economists’ consensus of up 3.3%.\u00a0 As a reminder, fourth quarter GDP was up 5.6%.<\/span><\/p>\n

Analysis:<\/strong> Recall that GDP is composed as follows:<\/span><\/p>\n

C<\/strong>onsumer spending + I<\/strong>nvestments by businesses + G<\/strong>overnment spending + X<\/strong>ports, net<\/span><\/p>\n

The first quarter numbers are encouraging.\u00a0 In particular, the C<\/strong>onsumer component was up 3.6%.\u00a0 Because this increase was larger than the overall increase in GDP, it means that the C<\/strong>onsumer component of GDP is growing faster than the overall economy.\u00a0 That same portion of GDP was only up 1.6% in the fourth quarter.\u00a0 Because consumer spending is\u00a0usually 70% of the economy, it needs to\u00a0be robust for the\u00a0health of the economy to be strong.\u00a0 By contrast,\u00a0the fourth\u00a0quarter’s GDP was up because businesses were stocking up on inventory in expectation of recovery.\u00a0 That is not a sustainable situation.\u00a0 However, this quarter’s good showing from the U.S. consumer is very positive<\/strong>.<\/span><\/p>\n

The good showing from the U.S. consumer is an indication that the mood of the average citizen has shifted to one of greater confidence.\u00a0 That greater confidence should translate into greater business confidence and consequently should translate into businesses hiring new employees.\u00a0 Therefore, we are likely to see a dent in the unemployment rate being made in the second quarter, barring any major external shocks to the economy.<\/span><\/p>\n

An external shock would be on the order of magnitude of a massive terrorist attack; another war in the Persian Gulf, such as with Iran over its nuclear ambitions; another natural disaster of Katrina-sized magnitude; or a complete meltdown in Europe.\u00a0 Of these scenarios the one that I am following most closely is the possible dissolution of the EU – a\u00a0situation whose implications\u00a0I have spoken about and followed on the blog going back over a year.\u00a0 See the follow up post to this one for more on this subject.<\/span><\/p>\n

Importance grade:<\/strong> 10<\/strong>; this is an investment blog so the topics I cover must always relate back to the financial markets and businesses, in general.\u00a0 Chiefly financial markets\u00a0track the performance of the underlying economy (usually over 2-5 years).\u00a0 The economy, as measured by GDP, grew 3.2% in the first quarter.\u00a0 This is very good news and marks, to my mind, the official end of the recession.<\/strong><\/span><\/p>\n

Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

First quarter Gross Domestic Product (GDP) was up at an annualized rate of 3.2%.\u00a0 This compares to the economists’ consensus of up 3.3%.\u00a0 As a reminder, fourth quarter GDP was up 5.6%. Analysis: Recall that GDP is composed as follows: Consumer spending + Investments by businesses + Government spending + Xports, net The first quarter […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-406","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/406","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=406"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/406\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=406"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=406"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=406"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}