So is this good news? Or isn’t it?
I tend to think it’s good news, proving the resiliency of the U.S. economy and the old-fashioned drive to make money inherent in all Americans. But there seems to be debate.
The economy grew at a faster-than-expected 5.7 percent pace in the fourth quarter, the quickest in more than six years…
Is that rate annualized? UPDATE – yes.
…as businesses made less-aggressive cuts to inventories…
They want bigger inventories, which is a good thing. Question, though: how long have businesses been making “aggressive cuts to inventories?” And is is possible that they’ve simply cut all they can?
…and stepped up spending.
Well that has to be good news. Right?
Hat tip Boots & Sabers for that story.
On the other hand, Dad29 says in the comments:
But GDP measures include Gummint spending.
It’s a good sign, but not necessarily as good as it looks.
Ah. So. Keynesians everywhere rejoice: the Gummint is taking your advice.
More: Ed Morrissey points to this CNBC story:
Growth was boosted (by) a sharp slowdown in the pace of inventory liquidation, a factor that could mask the strength of the economic recovery from the longest and deepest downturn since the Great Depression.
Okay, so waitaminute…what do they mean by “inventory liquidation?” Does it mean what it looks like? It looks like it means liquidating – getting rid of – inventory. So businesses hanging onto inventory rather than getting rid of it adds to GSP?
That doesn’t seem to make any sense. If it’s inventory, then it’s already been produced. It just hasn’t been sold yet. That should be GDP-neutral. And anyway, businesses would hang onto their inventory because they think they’re going to need it, right? So this should be good.
I know I’m not making any sense right now. In my defense, neither is this story.
More:
But even stripping out inventories, the economy expanded at an annual rate of 2.2 percent, accelerating from the 1.5 percent increase in the third quarter, reflecting relatively strong performance from other segments of the economy.
Well that’s a little more ho-hum. Plus, Ed reminds us that Commerce had to revise their third-quarter GDP estimate down twice, so let’s not all go getting all excited about this.
All that being said, it’s still a good number, which is better than a bad number.
Via Memeorandum.
UPDATE – or maybe I’m wrong about that, too. The Washington Post: Big jump in GDP may veil weakness in economy.
Counterintuitive.
Comments are closed.