Wednesday, April 29, 2009

US GDP down 6.1 percent in the first quarter

No sign of a recovery; no green shoots, only nasty weeds.

The big surprise was investment; which fell dramatically in the first quarter. This doesn't auger well for a quick recovery.

As the chart suggests, the US economy has been struggling since the middle of 2007. The high high point was the second quarter of 2008, when the Bush stimulus package injected some cash into the pockets of US consumers.

By the third quarter, the stimulus was played out, offering a warning about the limitations of fiscal policy and Keynesism in general.

The Obama fiscal package, which was about 4 times larger, has done nothing to restore growth.

Politicians never seem to learn.


  1. It neatly follows on from the UK's dreadful GDP performance in q1.

    The world has turned to sh-t.

  2. Anonymous, i agree.

    What i don't understand is the relationship between the UK sharemarket and reality. I assume that we must be in some sort of bear market rally.

    Whose putting their money into the market given the dire economic and fiscal outlook? Is it an inflation play? or are there investors out there who see green shoots? or is it day traders/speculator types?

  3. Politicians are lying bags of shite: everyone knows that. Gordon Brown is the human form of this. As a comdedien once said: "five pounds of shite in a one pound bag"

    As for where all the investment money is coming from: praise be Allah the merciful, the almighty, his most honourable. And of course: Ni Hao: the west is a paper tiger and an imperial lap dog.

  4. I heard it said that the stock market rally is based on the consumer spending part of the 6.1% GDP contraction, actually turning out to be better than expected.

    As 70% of US GDP is based on consumer spending, the stock market now hopes the 'spending-our-way-out-of-trouble' strategy is showing signs of working

  5. Obama's stimulus should have been bigger! I think it should have been at least $324,120,092,761,454,348,239,760.98!

    Then it would have worked.

  6. The big surprise was investment; which fell dramatically in the first quarter.This wasn't a surprise to those who pay attention.

    Politicians never seem to learn.Neither do bloggers, especially those who don't grasp the difference between the two stimulus packages and why the first one was completely inappropriate given the economic conditions - something that has been explained many times.

    And bloggers who don't understand that most of the funds from the current stimulus package haven't been spent yet? Probably even less capable of learning.

    You should apply at CNBC, because your analysis is even less rigorous than Kudlow's.

  7. Anon at 3:34, exactly when can it be said to have failed? Sooner or later the economy will turn around of it's own accord can we assume you be claiming "victory" then?

  8. Only a third as much consumer/mortgage credit available means an economy only a third the size. Simples!

    B. in C.

  9. RBS shares up. Will this continue ?

  10. electro-kevin said...

    RBS shares up. Will this continue ?
    Yup - All the way up to exactly the point where The Management's stock options are In The Money and can be cashed at a profit ...

  11. Anonymous: "All the way up .."