GDP Is A Joke January 31, 2012

Not just this month, but pretty much all of the time. But then, we can say that about most, if not all, gov’t stats, can’t we?

John Crudele in the NY Post:

In order to get to that 2.8 percent growth the Commerce Department used a very unrealistic level of inflation in its calculations.

Let me explain: The government comes up with a figure on how much it thinks the economy grew, or shrunk. Friday’s figure was a first estimate for the fourth quarter, so most of the numbers used in the calculation are only guesstimates anyway. (But that’s for a different story.)

The government then takes that growth figure, subtracts the rate of inflation and comes up with the real growth it reports in its press release.

So, in other words, if inflation is rising it reduces the rate of actual, after inflation, growth — which is the figure that Washington reports.

In Friday’s number the government used 0.4 percent as the rate of inflation. Zero. Point. Four. Percent.

In which country is inflation that low? Certainly not in America. Absolutely not in the last four months of 2011.

The consumer price index, which is put out by the US Census Bureau, had prices up 3 percent for the year.

And the rate of inflation used in calculating the third-quarter 2011 GDP was 2.6 percent; in the first and second quarters, combined, the rate was 2.5 percent; it was 1.9 percent in the fourth quarter of 2010.

So how does the Zero-Point-Four-Freakin’ percent sound now?

—

Let me put this another way in case you are missing my outrage.

If the inflation figure used in last Friday’s GDP figure had just remained the same as the 2.6 percent rate from the third quarter, Washington would have had to report fourth-quarter annualized growth of just 0.6 percent.

Yet another link from Instapundit.

Market Wrap January 31, 2012

Dow Industrials 12632.91 -20.81 -0.16% S&P 500 1312.40 -0.61 -0.05% Nasdaq Comp. 2813.84 +1.90 +0.07% Russell 2000 792.82 +0.44 +0.06%

NYSE Comp. 7838.48 +4.07 +0.05% Nasdaq 100 2467.95 +2.63 +0.11% Dow Transports 5319.14 -2.83 -0.05% Dow Utilities 448.84 +2.28 +0.51%

View Major Index charts

Internals managed to get back to the positive side, and volume picked up a bit. Advances/declines were 3 to 2 on the NYSE and 10 to 9 on the Nasdaq, with up/down volume flat on the NYSE and 10 to 9 on the Nasdaq. New highs/lows were 204/12 on the NYSE and 83/12 on the Nasdaq.

Leaders — HMOs (+1.15%), Disk Drives (+0.70%), Transport (+0.66%), Defense (+0.61%), Utilities (+0.50%), REITs (+0.49%), Insurance (+0.48%), Airlines (+0.40%)
Laggards — Homebuilders (-1.37%), Metals (-1.24%), Retailers (-0.97%), Hospitals (-0.69%), Network (-0.62%), Natural Gas (-0.59%), Internet (-0.15%), Chemicals (-0.12%)

An extensive visual representation of the day’s winners and losers can be found at Finviz.com.

Treasury Yields — 6-Month : 0.08 %,  2-Year : 0.21 %,  5-Year : 0.70 %,  10-Year : 1.79 %,  30-Year : 2.94 %

Energy Prices — Crude oil: $98.41/barrel,  Gasoline: $2.88/gallon,  Natural Gas: $2.47/mmBTU

US Dollar Index — 79.281

Precious Metals — Gold: $1739.10/ounce,  Silver: $33.17/ounce,  Platinum: $1585.00/ounce

BMB Note:  
The bulls saved another one – what is that, three in a row? Bears had a chance to pull the market down today, but it just didn’t happen.

January’s over. On to February.

Repression January 31, 2012

I’m feeling pretty repressed — are you?

“The Fed’s Rain Dance at the Bottom of the Stairs”

At first, the expectation was that the “exceptionally low” rates would last 6 months, but now it’s been three years, and three more years have already been added to the schedule, so six years in total, and soon, it’ll be 20 years, à la Japanese, which isn’t exactly the paragon of a healthy economy. While there are cosmetic differences between the two, they do share ZIRP, out-of-control budget deficits, a ballooning national debt, and a political refusal to deal with reality—aided and abetted by a central bank.

It’s an ugly situation. Short-term treasury yields are at practically zero, 5-year yields hit a new all-time low of 0.71%, and even 30-year yields dipped below 3%. Savings accounts, money market funds, and short-term CDs yield just about nothing. Yet inflation was 3% in 2011. The many trillions of dollars that individuals, institutions, and countries hold in these assets are slowly being ground down by inflation, but without compensation in form of yield. Financial repression. And the largest slo-mo ripoff in the history of mankind.