Tuesday, August 6, 2013

Q2 growth wasn't so weak after all

Thanks to strong growth in U.S. oil production, the U.S. is exporting more and importing less. With June trade data coming in stronger than expected (exports up $4.1 billion and imports down $5.8 billion), trade did not subtract 0.8 percentage points from second quarter growth as BEA estimated in last week's preliminary GDP report. If there are no other revisions, this would mean that growth in the second quarter will be revised to 2.5%, a good deal better than the first estimate of 1.7%.

Imports have been flat for the past few years, while exports have been moving slowly higher. This narrows the trade gap and adds to GDP.

Goods exports are now at a new all-time high and have more than doubled in the past decade.


Benjamin Cole said...

Scott Grannis very delicately does not point out that the current exchange rate for the dollar---a so-called "weak" dollar, but one that is strong for US manufacturers---is helping exports and GDP growth.

The "strong dollar" crowd has mystified me for decades---I assume it was a idea that developed when US manufacturers were setting up overseas factories, and wanted the dollar to be "strong" so as to make overseas acquisitions and development cheap, and so they could easily import back into the USA, then a dominant market.

Now that trade is becoming more of a two-way street, we are hearing less about the vital need for a "strong dollar."

You have to love that oil shale production.

So, why do we keep the ethanol program?

Benjamin Cole said...

The Wall Street Journal

Stocks Take Biggest Loss Since June U.S. stocks fell the most since June on concerns over the timing of Fed tapering.

U.S. stocks fell the most since June, after two Federal Reserve officials indicated the central bank could begin reducing its easy-money program as soon as next month.


You think the market is trying to tell the Fed something?

And when did the tight-money, right-wing crowd becomes the enemies of Wall Street?

Times have changed. no?

Hans said...

Ben Jamin, since when is weak anything an advantage?

For the past fifty years, the misfits in the Beltway have been undermining the Dollar as a way to grow exports and reduce imports.

It simply has not work! The Yen was strong for decades and export growth continued unabated.

As for this 2.5% GNP growth, remember 1% of it comes from governmental unit spending, which adds nothing to productivity...

As I have stated before, a thief steal my wallet with two hundred bucks in it, will his spending add to the GNP?

Scott Grannis said...

As I see it, the market has now dropped a little over 1% from its all-time high (set Aug 2nd). If anything, that's a message that the Fed may be doing things right, not wrong.

McKibbinUSA said...

If we the people are counting on economic growth to pull the US out of its public revenue and debt malaise, then we the people should be very worried -- unaccredited investors (those earning less than $300,000 annually with a net worth of less than $1 million) should be under cover watching out for the four horsemen of the apocalypse...

McKibbinUSA said...

PS: The import/export situation is particularly gruesome at this point -- more at:


Hans said...

Sorry, Mr Grannis, the market can no longer be used as an economic indicator, as it is being controlled by the Central Bank.

Hear is Mr Short's thoughts on the current GNP figures which is less than exuberant than the author of this thread.


Five years after the govcession and this is all the growth we are seeing, should be a matter of grave concern and not jubilation.

Of course, those with any sense of a macro vision would not be surprise of the Beltway canard of a recovery.

The clock is ticking and the next recession is on the horizon.

In fact, considering all the spying and lying that has taken place in WDC, why should any of the other organs be trusted unless one is a collaborator or ignorant...

Disney World, would be a more appropriate setting for our nation capital.

Sorry the news is not more cheerful.