Trillions Of Stimulus But Nothing To Show – -Q1 Nominal Final Sales Went Negative

These are strange economic times, with an undeclared (and unrequited) recovery existing apparently alongside an undeclared (and strengthening) recession. The economy is superficially partly one thing and partly the other, producing innumerable inconsistencies that should be more troubling than they are taken. Maybe that relates to the fact that almost six full years after the Great Recession was declared ended and the trillions in ‘stimulus’ spent and conjured toward ending it, there isn’t much other than that amplified gyration to show for it.
Instability is troubling enough on its own but it is also suggestive of statistical problems outside the ‘normal’ paradigm. This is observed primarily of the employment statistics but you could certainly add GDP to the discussion. It is difficult to ascertain much of a certain interpretation when the figure can swing wildly from -3% to 5% and almost back again in the space of just five quarters. What is truly amazing about that is not the presence of just low lows and high highs but rather that GDP itself was constructed in the most favorable economic terms (adding government as a plus?); in other words, GDP is meant to show the best growth possible.
That it can’t maintain itself on a steady pace is highly suggestive of both structural deficiency and statistical unsuitability. There is more to say about GDP itself, especially since GDP ex inventory was about -3% again, but there are worse and more important indications than even that. The Final Sales accounts strip out some of the artificial and beneficial (for GDP’s view on growth) aspects and focus solely on the private economy at the point of sale. That means inventory is extraneous in terms of the private economy in the moment; the purchaser view also does not infuse imports with a negative sign, as we want to know how much private ‘demand’ actually exists before entangling geography and currency systems in analysis.

This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ April 29, 2015.