Q3 GDP: good news for now, bad news for the future
Q3 GDP: good news for now, bad news for the future
– by New Deal democrat
I have to keep this note brief, since I am on the road.
As you presumably already know, real GDP was positive for the Third Quarter, up 2.6% at an annual rate:
Subject to revisions in the next several months of course, but for the moment, this puts to rest ideas that the US economy was in a recession earlier this year, since the decline was very shallow and not across all important indicators.
The news on the leading components of GDP was mixed.
Proprietors’ income, a proxy for corporate profits, which won’t be reported for another month, were up 1.5% (blue in the graph below). The “official” leading metric uses unit labor costs as a deflator, which we also don’t know yet. But if ULC are in line with the past several quarters (red), real proprietors’ income was probably flat:
Finally, real private residential investment, the was housing is included in GDP, took a bad hit:
Housing is just about screaming “incoming recession!” at this point.
So: good news for the present, bad news for the near future.
While I’m at it, here’s this week’s update on jobless claims:
No big move here. No real deterioration, but no improvement either.
“First comments on Q2 GDP, no Recession Yet.” Angry Bear
“Q1 GDP negative; but more importantly, two of three long leading indicators have deteriorated,” Angry Bear
If you could slow or reverse to some extent the huge increase in the cost of housing without tanking the rest of the economy it would be a cute trick. And it seems to be the goal.
SW
Having bought a new house I can assure you of some things.
– At a minimum, 10 percent of the price is caused by waste.
– If you miss your closing date for whatever reason, you will pay a fine for each day missed of ~$200/day.
– If the house is not 100% finished by closing, the builder will suffer no loss/penalty. Its an “oh-well.”
– Once you discover all the defects, you will spend a large amount of time arguing with them about fixing the defects. I explained Uniform Commercial Code to our builder and Reasonable Man.
– If your contract calls for 10 plants and they only have nine, they will try to hide the shortage.
– Our builder was kind enough to call us after 3 weeks to alert me he had sign the purchase order to pour the rest of the concrete sidewalk. His call was meant to aggravate. I did not take the bait. Just bided my time.
– They could benefit by employing critical path methodology.
Literally, they do not give a shit as to quality and how much time it take to build your home. Wasted labor is more an issue than lack of labor.