https://sg.finance.yahoo.com/news/rpt-column-u-economy-loses-000000823.html
Don't be fooled by the headline number because the demon is hidden in the details.
Our previous analysis of the PMI had already shown that the US economy was slowing down.
https://sg-stock.blogspot.com/2019/04/the-us-economy-has-flipped-and-fissures.html
Local consumption makes up about 70% of US GDP and the latest GDP number is showing that consumer spending is slowing down rapidly. The sharp fall in import is also raising some concerns and this is also reflected in the previous PMI number.
It looks like the US must end the US-China trade war soon or the bad economic growth will surface in the GDP headline number.
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2 comments:
No worries. Another 20%-100% gains in markets, depending on which markets/countries, before the next big recession!
Let me illustrate how the headline number can fool you by looking at the example below.
GDP = G + I + C + (X-M)
GDP = 1 + 1 + 1 + (1-1)
= 3
Then, the actual economic conditions deteriorate with Consumption decreasing by 20% and M(imports) decreasing by 50% while the rest are stagnant.
GDP = 1 + 1 + 0.8 + (1-0.5)
= 3.3
The GDP has increased by 10% from 3 to 3.3 when the consumption and imports are falling because of economic deterioration. The headline GDP number is not reflecting the actual economic situation.
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