Why the market should go up on this encouraging data
By Daniel at 30 October, 2008, 11:17 am
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First:
“After getting a big boost from the tax rebates in the second quarter, inflation-adjusted after-tax incomes fell 8.7%, the largest quarterly decline since the record-keeping began in 1947. Incomes fell much more in the Great Depression, when annual records were kept.”
COMMENT: This is great news, we aren’t as bad as the Great Depression yet! Maybe we can title this the Small Depression.
Second:
“The growth figures would have been much worse without sizable positive contributions from government spending, net exports and inventories.”
COMMENT: More great news! With a contraction in GDP and resulting government receipts (read tax revenue) the budget deficit just increased! And with the strengthening of the dollar, we know that exports will decrease. And increase in inventory - with productivity down doesn’t that mean that buying of goods went down as well leading to an increase in inventory? And don’t you cut inventory by shutting down production and laying off workers?
Third:
“In nominal dollars (not adjusted for inflation), GDP increased at a 3.8% rate to $14.43 trillion. The increase was due entirely to higher prices.
Personal after-tax incomes taxes fell 3.7% after the tax rebates from the federal government led to a hefty 16.7% gain in the second quarter.”
COMMENT: The best news of all - GDP increased because of higher prices at the same time personal incomes fell - to a net differential of 7.5% less purchasing power for disposable income!
This is all such great news, but it wasn’t the “0.5%” people expected! Darn, I could have thought I saw 0.2 to 0.25% on this same site yesterday. Guess I misread.
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