Earlier today, the markets received word that 4th quarter GDP had been revised down from 2.6% to 2.2%. The 4th quarter GDP report was previously thought to be much higher (due to a strong 3rd quarter) before coming down over the past 2 months. The revised 4th quarter GDP number continues to show a stagnant economy, with slowing growth. The politicians like to take a single number for a quarter and annualize it—that’s how they come up with something like 5% (which was the revised 3rd quarter number). But that doesn’t mean the annual rate actually achieves that.
Take a look at this list of annual GDP by year that Jim Rickards tweeted earlier today:
Annual GDP by Year:
2007 1.8%
2008 -0.3%
2009 -2.8%
2010 2.5%
2011 1.6%
2012 2.3%
2013 2.2%
2014 2.4%
We don’t always get the straight story as there is too much Wall Street cheerleading, continuously touting the bright side of how the economy is doing. The report is more of a macro indicator, as the markets are little effected thus far by the report: stocks and bonds were both trading near par at lunchtime with the S&P 500 up 1.5 points and the 10 year and 30 year treasury bond yields at par and up 0.012 respectively.
The underlying problem remains: countries around the world are sitting on a lot of debt and their economies are slowing.
Follow Jeff on Twitter: @JeffVoudrie
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
