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Thursday, January 9, 2020

The upcoming US GDP will be a better number but it is an illusion. Why?

https://www.cnbc.com/2020/01/07/us-trade-deficit-at-43point09b-in-november-vs-43point6b-estimate.html

The most recent US deficit fell to its lowest level under Trump's presidency because of the huge reduction in imports.  Being a consumption-led economy (70% of GDP), this doesn't bode well for the US because import is a precursor of local consumption.

Please read our post on China to understand the importance of imports since China is also a consumption-led economy.

http://sg-stock.blogspot.com/2019/12/how-is-chinas-economy-doing.html

The reduction in imports usually signals a future reduction in consumption.  Since import is part of the GDP formula, the decline in imports will boost the GDP figure.

Please read our post on the GDP calculation.

http://sg-stock.blogspot.com/2019/11/the-latest-us-gdp-growth-is-not.html

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