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Home Front: Politix

2010 Q4 GDP adjusted downward to 2.8% "Unexpectedly!"

2011-02-25

Last month, the Obama administration claimed success with the 2010 Q4 annualized GDP growth rate estimate from Commerce of 3.2%. Today, Commerce has issued its customary follow-up estimate, and the news is not as bright. Their 2010 Q4 estimate dropped to 2.8%, barely above Q3′s 2.6%

Over the last two years, the pattern from Commerce has been to advance a flashy number initially, then back down in later estimates. The worst case came early, when 2009 Q3 got revised to 2.8% from 3.5%. In 2010 Q3, the pattern reversed itself, with GDP estimate rising in each new estimate to the 2.6% level.

Reuters doesn't exactly use the U-word, but notes that its economists expected an upward revision in GDP:

Economists had expected GDP growth, which measures total goods and services output within U.S. borders, to be revised up to a 3.3 percent pace. The economy expanded at a 2.6 percent rate in the third quarter. For the whole of 2010, the economy grew 2.8 percent instead of 2.9 percent.

The outlook is rather poor, thanks to surging oil prices from the crises in the Middle East and North Africa:

In addition, consumer spending -- which accounts for more than two-thirds of U.S. economic activity -- grew at a 4.1 percent rate in the final three months of 2010 instead of 4.4 percent.

It was still the fastest since the first three months of 2006 and was an acceleration from the third quarter's 2.4 percent rate. But there are concerns that surging crude oil prices could hurt consumer spending and slow the economy's recovery.

In other words, we have not freed ourselves from stagnation. The one area that held the most promise, consumer spending, will likely get curtailed thanks to the inflation-multiplying effect of higher oil prices. If we were pumping our own oil in the Gulf and off the coasts, we would not only have hundreds of thousands of more jobs, we would also have insulated ourselves a little better from the price effects of turmoil in the Middle East. Our GDP might be going up instead of sideways at this point.
And Bambi, the Unions and the dhimocrats wonder why the average Joe/Jane is so eager to start cutting away at budgets.
We are broke and not recovering, assholes. The ~~debt bomb~~ stimulus and your screwed up energy policy have doomed us to a nice decade of suck.

Posted by:DarthVader

#7 I know man, the way the Prez hit those teleprompter marks with his look, had the Wright accent, wow! Thought my bike was a train all day long, didn't even mind the freezing snot.

Posted by: swksvolFF 2011-02-25 22:25

#6 Gas around here went from 3.15 yesterday to 3.35 today. Milk went up a buck a gallon in the last week.
I think the worst is yet to come. But that Motown concert looked fabulous on the news this morning...

Posted by: tu3031 2011-02-25 18:17

#5 Yep, the same apparatchiks in the government who report up the line that everything is going well in the old Soviet bureaucracy. Give the boss the happy/glad story. Hell, even the CIA who were reading the stuff thought it was true too. Then the collapse.

Posted by: Procopius2k 2011-02-25 18:01

#4 BC,

Yes you can trust the DOC numbers. The problem is that the DOC can only use the reports they receive and those reports overcount part of the economy, undercount other parts of the economy and miss other parts altogether.

This is because we don't (thank God) have a centrally planned economy (and with luck we will never have one).

Posted by: lord garth 2011-02-25 16:15

#3 From experience I can tell you that you cannot trust Department of Commerce numbers. They are pure propaganda and are tweaked to fit the current administration.
I am surprised they adjusted them downward. That tells me things are not good. It also tells me the real number may be somewhere around a negative growth (after you cut through the accounting and economic mumbo jumbo they try to blow up your butt in the reports)

Posted by: Bill Clinton 2011-02-25 16:00

#2 But there are concerns that surging crude oil prices could hurt..

Will hurt till you drill your own. Becoming independent of the vagaries of the world that drive a fundamental element of the economy and not doing so is a crime against the people driven largely by religious fanatics aided a abetted by one political group.

Posted by: Procopius2k 2011-02-25 15:51

#1 Federal deficit spending is the only thing keeping the GDP out of the negative range.

Posted by: Anguper Hupomosing9418 2011-02-25 13:50

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