Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 3.5 percent in the third quarter of 2009, (that is, from the second quarter to the third quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 0.7 percent.
Motor vehicle output added 1.66 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change. Final sales of computers subtracted 0.11 percentage point from the third-quarter change in real GDP after subtracting 0.04 percentage point from the second-quarter change.
Real personal consumption expenditures increased 3.4 percent in the third quarter, in contrast to a decrease of 0.9 percent in the second. Durable goods increased 22.3 percent, in contrast to a decrease of 5.6 percent. The third-quarter increase largely reflected motor vehicle purchases under the Consumer Assistance to Recycle and Save Act of 2009 (popularly called, “Cash for Clunkers” Program).
Real exports of goods and services increased 14.7 percent in the third quarter, in contrast to a decrease of 4.1 percent in the second. Real imports of goods and services increased 16.4 percent, in contrast to a decrease of 14.7 percent.
Nondurable goods increased 2.0 percent in the third quarter, in contrast to a decrease of 1.9 percent in the second. Services increased 1.2 percent, compared with an increase of 0.2 percent.
Real exports of goods and services increased 14.7 percent in the third quarter, in contrast to a decrease of 4.1 percent in the second. Real imports of goods and services increased 16.4 percent, in contrast to a decrease of 14.7 percent.
Real federal government consumption expenditures and gross investment increased 7.9 percent in the third quarter, compared with an increase of 11.4 percent in the second. National defense increased 8.4 percent, compared with an increase of 14.0 percent. Nondefense increased 6.8 percent, compared with an increase of 6.1 percent. Real state and local government consumption
GM Auto Sales Rise 17% – Not as Impressive as it Sounds
by ilene - June 2nd, 2010 3:08 pm
GM Auto Sales Rise 17% – Not as Impressive as it Sounds
Courtesy of Mish
V-Shaped recovery proponents are crowing about auto-sales as GM U.S. Sales Rise 17%, Topping Analysts’ Estimates.
General Motors Co. posted a 17 percent increase in May U.S. sales, the first time the automaker topped analysts’ forecasts since January, as customers snapped up Chevrolet Equinox sport utility vehicles and Malibu sedans.
Deliveries rose to 223,822 from 191,875 a year earlier, the Detroit-based automaker said today in statement. GM was expected to report a 5.9 percent increase, the average estimate of five analysts surveyed by Bloomberg. Industrywide sales may match the longest streak of gains in a decade, analysts estimated.
Total sales of Chevrolet vehicles gained 31 percent from a year earlier to 167,235 vehicles, and GMC brand deliveries increased 26 percent to 30,160.
Industrywide sales may have risen to an annualized rate of 11.2 million cars and light trucks for May, the average estimate of eight analysts. That would mark the eighth straight month of year-over-year gains, according to Bloomberg data.
The report speculated that Toyota sales may have risen 7.5%, Honda 22%, Nissan 11%, and Ford 16%.
Before everyone brings out the high-fives celebrating a miraculous recovery, let’s put this rebound in perspective.
Light Vehicle Sales Autos and Trucks
Note the cash for clunkers spike at the end of the last recession bars.
The industry had impressive gains percentagewise, but sales are at early 1980′s levels. This is hardly a V-Shaped recovery.
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Money Talks, Google Walks, Other Potpourri
by ilene - January 14th, 2010 8:28 am
Money Talks, Google Walks, Other Potpourri
Every day there are a number of significant stories that come my way that I do not have time to make in depth comments on. Here is a collection on my stack worth a quick peek.
Google Walks
Google China Threat May Reflect U.S. Companies’ Growing Unease
Google Inc.’s threat to pull out of China is the most visible reflection of U.S. companies’ growing disillusionment with the country nine years after it joined the World Trade Organization, business groups said.
Washington trade organizations representing companies such as Microsoft Corp., Boeing Co., Intel Corp. and Cigna Corp., which all backed China’s entry into the WTO and fought off legislation to punish Chinese imports, say China is increasingly discriminating against them on government contracts and through unfair subsidies.
Google, owner of the most-used search engine, said Jan. 12 that it would end self-censorship of its product in China after attacks on e-mail accounts of human-rights activists. The Mountain View, California-based company said the move may cause it to close offices in the country.
Such comments from longtime backers of U.S.-China relations represent growing dissatisfaction among U.S. companies, said Susan Aaronson, a professor at George Washington University in Washington who writes about U.S.-China trade relations.
“I see much greater disillusionment as China is promoting its national champion companies,” Aaronson said in an interview. “More and more firms are going to say: I can do without this market.”
This story is far more significant than the play it will get. It signals growing protectionism as well as dissatisfaction with dealing in China. To top things off, Chinese money supply is growing completely out of control and it is only a matter of time before China implodes or explodes. More on that in another post later.
Money Talks With Protest Slogans
In Iran, money talks with protest slogans
Facing hard-line forces on the streets, Iran’s anti-government demonstrators have taken their protests to a new venue: writing "Death to the Dictator" and other opposition slogans on bank notes, while officials scramble to yank the bills from circulation.
"What did they die for?" asked one message on a bill, referring to the estimated dozens of demonstrators killed in the wake of vote-rigging allegations in last summer’s re-election of President Mahmoud Ahmadinejad.
Others were stamped with the
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White House LIES: CFC
by ilene - October 30th, 2009 9:49 pm
White House LIES: CFC
Courtesy of Karl Denninger at The Market Ticker
This is ridiculous and anyone who believes it deserves to eat The White House Dog’s used food:
The administration’s blog post argued that Clunkers helped to lower auto prices on the rest of the vehicle market as well, a fact the administration said Edmunds ignored.
What a total load of crap.
First, I personally walked into dealerships during the "CFC" program time, and every single one of those dealers was literally screwing everyone who walked into the door.
Normally, you can buy an American car for $100 or so over invoice price. I have, in fact, not purchased one vehicle for more since I started buying cars! My last "new" American vehicle, a 2002 Suburban, was bought during the 0% "craze" following 9/11 and even with the 0% financing I bought it for $1,000 UNDER factory invoice. I saw no dealer willing to sell at anything approaching that number this time – they were all selling at full sticker, and two had their own "supplemental rip-off stickers" on the windows that they refused to negotiate on yet were full of junk (the usual "undercoating" and "fabric protection" for $250 garbage.) People literally got robbed to the tune of $2,000, $3,000 and sometimes more than the rebate was worth on these so-called "deals."
Second, this "program" destroyed the low end resale market. It literally took all those cars and crushed them! If you were in the market for such a clunker as the only car you could afford they all disappeared for the duration of that program. This did severe damage to sections of the used-car market and the consumers dependent on it.
This program was nothing other than a royal screwing of the American Consumer and a sop to the UAW, and that’s a fact. Edmunds got this exactly right and the White House is pissed off that they got called on their incessant lies by a very influential auto industry publication.
Well, boo-freaking-hoo Barry.
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Consumer Spending Plummets As Crack Hit From Cash For Clunkers Runs Out
by ilene - October 30th, 2009 4:49 pm
Consumer Spending Plummets As Crack Hit From Cash For Clunkers Runs Out
Courtesy of Clusterstock
For the full Wall Street Journal article click here.>>
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Market Cheers Over Ugly GDP Report
by ilene - October 29th, 2009 9:26 pm
Fine details of the GDP report not getting past Mish’s analysis. – Ilene
Market Cheers Over Ugly GDP Report
Courtesy of Mish
The stock market and commodities are giddy today on the Third Quarter Advance GDP Estimate which increased at an annualized rate of 3.5%.
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CHART OF THE DAY: Cash-For-Clunkers MASSIVELY Distorted GDP
by Chart School - October 29th, 2009 3:51 pm
No surprise there was going to be a distortion in the GDP number. This is chart shows motor vehicle output spike quarter over quarter. How much of an effect did this have on overall GDP? – Ilene
CHART OF THE DAY: Cash-For-Clunkers MASSIVELY Distorted GDP
Courtesy of Vincent Fernando and Kamelia Angelova at Clusterstock
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If anyone mentions the just-released 3.5% U.S. third quarter GDP growth, just throw this chart in their face. Cash for Clunkers clearly distorted the U.S. economic figures in an unsustainable fashion.
According to the Bureau of Economic Analysis (BEA), motor vehicle output spiked a seasonally-adjusted 157.6% quarter on quarter. This is completely unprecedented. Vehicle output is clearly going off a cliff next quarter. The question will be how low can the blue line below go.
Next quarter, we won’t just be returning to business as usual for auto output. Don’t forget that Cash for Clunkers pulled future auto demand, ie. some of Q4 demand, into Q3. Thus Q4 is likely to be very weak since many people who planned to buy a car in Q4 probably took advantage of Clunkers and bought in Q3.
To put this into GDP terms, according to the BEA the spike you see below added 1.66% to the U.S. GDP growth figure reported. Thus without it, GDP growth would have been only 1.89% (3.5% – 1.66%) in Q3.
Now imagine if next quarter the blue line below goes down into negative territory as it did just two quarters ago. Next quarter, not only are we unlikely to get Q3′s boost, but motor vehicle output data could subtract from GDP as well. So watch out for the cliff…
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Mad Hedge Fund Trader’s Global Market Comments
by ilene - October 2nd, 2009 11:50 am
Mad Hedge Fund Trader’s Global Market Comments
October 1, 2009
Featured Trades: (IDX), (INDONESIA), (FSLR), (STP), (YGE)
1) Was that nice for you, dear? Now that cash for clunkers has expired, new car sales have cratered. September is coming in at a 7 million unit run rate, lower than before the program started, and down 24% from already depressed YOY levels. It really makes you wonder what will happen when the other government stimulus programs run out. The $8,000 tax credit for first time home buyers ends November 30, and unless you have a deal in contract, the program is effectively over. That is thought to be behind the recent weakness in new home sales, the biggest beneficiaries of the program. Is this the beginning of the “square root,” or the “W.”
or 
?
2) If you are looking for another emerging market to add to your list of things to buy on dips, then take a look at Indonesia. The world’s largest Muslim country offers a combination that I love, a population with great demographics that is also a major energy and commodities exporter. The archipelago is the biggest country in Southeast Asia and a huge exporter of oil and LPG to Japan on long term contracts. (An old friend of mine torched their Borneo fields at the beginning of WWII, and spent four years in a Japanese prison camp for his troubles.) Other big exports include marvelous textiles, rubber, and increasingly rare tropical hardwoods. The global financial crisis only knocked their growth rate from 6.1% to 4.5%, and now it is back above 6%. No doubt, $63 billion of direct foreign investment into the country helped. A series of tax reforms promise to keep the train moving, cutting the top corporate rate from 30% in 2008 to 28% this year, and 25% next year. Wisdom Tree had the “wisdom” to launch the country’s first ETF (IDX) in January (what timing!), which became one of the best performers this year, rocketing over 300% from the lows to $60. Islamic inspired terrorism is still a lingering concern. I keep Indonesia in the category of highly volatile, high risk, high return frontier markets that you only want to buy on a big dip. Keep it on your…
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Cash for Clunkers Will Go Wrong, But Not For the Right Reasons
by ilene - September 29th, 2009 9:57 pm
Cash for Clunkers Will Go Wrong, But Not For the Right Reasons
Courtesy of Jesse’s Café Américain
If I were to design a stimulus plan, Cash for Clunkers might be among them.
The target of the plan was to incent the public to trade in gas guzzling ‘clunkers’ for more fuel efficient, safer cars. It provided a spark of buying at a time of serious economic recession.
This is a classic case of promoting an economic and societal ‘good’ while providing a stimulus to spur economic activity. This is precisely the type of program that Big Business and its demimonde of commentators like when they are the primary beneficiary. Let’s say, in a program of tax incentives to promote useful capital expenditure spending. And what many of the private individuals who complain about the program like when it benefits them personally, such as the deduction of mortgage interest.
So why is this likely to fail, at least in part?
That is because the Obama Economic Team, under the leadership of Larry Summers, is grasping at stimulus and aids programs like bank capital asset subsidies that as part of a total package might be useful, but as remedies applied to a sick system do not promote a cure, but merely serve to mask the symptoms.
Stimulus and aid programs do not work when they are merely poured into a system that is broken, or worse, broken and corrupt.
And it cannot be reformed by actors who have been and continue to be willing beneficiaries of its flaws, such as the transference of wealth from the many to the few. Congress and the Administration have to take themselves away from the trough and start acting for the greater good of the people whom they represent, rather than the special interests who give them campaign contributions and fat, overpaid jobs when they leave office.
What we are experiencing is a collapsing Ponzi Scheme, as Janet Tavakoli describes so clearly and yet so well in Wall Street’s Fraud and Solutions for Systemic Peril.
This is why we say that the banks must be restrained, and the financial system must be reformed, and the economy brought back into balance, before there can be any sustained recovery.
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Oops: “Pulled Forward” Demand Really IS False!
by ilene - September 17th, 2009 12:46 am
Oops: "Pulled Forward" Demand Really IS False!
Courtesy of Karl Denninger at The Market Ticker
Sept. 16 (Bloomberg) — Chrysler Group LLC, the U.S. automaker run by Fiat SpA, said nationwide industry sales are off 19 percent so far this month after a government purchase- incentive program ended.
“We are going to see harsh reality in September,” Sergio Marchionne, the chief executive officer of Fiat and Chrysler, said at the Frankfurt Motor Show. He described the U.S. industry results as a “disaster.” Fritz Henderson, CEO of General Motors Co., said the market is “very weak” this month.
Disaster eh?
But but but I thought all those "cash for clunkers" buyers were people who wouldn’t have bought a car otherwise?
Looks like that was a load of BS out of the administration…. just like all the other so-called "stimulus" programs.
Just another example of pulling forward demand, which works exactly once per application, but then leaves a gaping, sucking hole where demand would have been in the subsequent months.
PS: Expect them to try some sort of BS similar with the expiring "Home Clunker" $8,000 rebate program that is ending in a couple of months. The two problems with it are the same as the problems here – the consumer is tapped out and can’t afford to buy (witness the FHA default rates in excess of 20%!) and those who DO buy anyway find themselves in a financial position they cannot really afford and didn’t think through.
In addition you further drain the demand pool and thus when the "stimulus" ends (and all must eventually end) you find yourself with no real buyers left!
All this faux "demand" being generated by the so-called "stimulus" is just doing more damage to the economy – damage that is accruing and will come to the surface with devastating effect.
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THOUGHTS ON THIS MORNING’S DATA
by ilene - September 16th, 2009 2:33 pm
THOUGHTS ON THIS MORNING’S DATA
Courtesy of The Pragmatic Capitalist
CPI came in in-line with expectations. The headline figure was 0.4% while the CPI less food and energy came in at 0.1%. These are relatively benign figures. There are no serious signs of deflation and inflation isn’t running wild. Not too hot and not too cold. A Goldilocks figure in case you’re a Kudlow fan. Unfortunately for those of us who are growing increasingly concerned about the perpetual boom bust cycle created by easy money, this only throws fuel on the fire. Bernanke is now in the exact position he wants to be – wait and see mode. That means the fire can rage while the Fed chief twiddles his thumbs. Much like he did when he kept rates too high in 2007 and much like Greenspan did in 2003 when he kept rates too low. If the global economy begins to take off as it did in 2003 we are almost certain to see a repeat of the boom portion of the cycle in the coming years. Of course, the likelihood of a following bust is high….Econoday has some thoughts on the data:
Several factors kept the core rate soft. The cash-for-clunkers tax credits helped push prices for new vehicles down by 1.3 percent. Apparel slipped 0.1 percent. Shelter costs were sluggish, including owners’ equivalent rent rising only 0.1 percent. The recession has kept rents soft which also impact owners’ equivalent rent which is based on actual rent for owner-type houses. On the upside, prescription drugs increased 0.6 percent and airline fares jumped 1.7 percent.
Year-on-year, headline inflation rose to minus 1.4 (seasonally adjusted) from down 1.9 percent in July. The core rate eased to up 1.5 percent in July from up 1.6 percent the previous month. On an unadjusted year-ago basis, the headline number was down 1.5 percent in August while the core was up 1.4 percent.
Outside of energy, consumer price inflation is subdued, leaving the Fed flexibility for when to start unwinding its balance sheet expansion. Given that the August numbers matched expectations, there should be little market reaction today. But the higher energy costs serve as a reminder that when recovery strengthens, oil prices and headline inflation are likely headed up. Bond traders should take note.
In other news. industrial production came in better than expected at 69.6%. This…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site