There were a lot of things wrong with yesterday's GDP report (as usual).
The BEA only subtracted -$17.9 billion for the change in trade deficit in "real" dollars, compared to the current-dollar worsening of -$48.4 billion. This is a convenient addition of +$30.5 billion to GDP growth.
This trade deficit manipulation was done by using a different inflation calculation for exports as opposed to imports. This, of course, reduced the "real" value of goods imported far more than of goods exported. How convenient--especially when the import-export numbers are only a guesstimate in today's report (the actual numbers aren't available until later this month--from the Census Bureau.)
Another +$29.4 billion was added through the reduction of unsold inventories.
Another +$14 billion of the increase came from National Defense spending (which is now at an annualized rate of $709 billion).
As Karl Denninger has alluded to, another +$18.5 billion of the increase came from Residential Housing investment.
Then, as Denninger also referred to, another +$36.2 billion of the increase came from Motor Vehicles and Parts. (This is after a consistent slow decline for the previous 4 quarters.) This increase perfectly parallels the cash-for-clunkers program.
So if you subtract all of these spurious additions from the alleged +$112.5 billion "increase," it comes out to an actual decrease of -$16.1 billion.
$112.5 bil - $30.5 bil - $29.4 bil - $14 bil - $18.5 bil - $36.2 bil =
-$16.1 billion.
So much for any real GDP "growth," or any real economic recovery.
Comments
Mike Chapman said:
"This trade deficit manipulation was done by using a different inflation calculation for exports as opposed to imports. This, of course, reduced the "real" value of goods imported far more than of goods exported. How convenient--especially when the import-export numbers are only a guesstimate in today's report (the actual numbers aren't available until later this month--from the Census Bureau.)"
This is a truly amazing new low in the government's number fudging experiment. I guess they plan to keep increasing the creative manipulation until we all take to the streets in protest.
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