US GDP Drops... while Employment Rises. Wait... what?!

[Jimmy Higgins]

In news that tickle the berries of the Alt-Right and GOP, the US GDP dropped 1.4% last quarter. This means we could technically be in a recession.

The U.S. economy unexpectedly shrank at a 1.4 percent annualized rate in the first three months of 2022 after more than a year of rapid growth, according to a Bureau of Economic Analysis report released Thursday. The new data is fueling concerns about a recession amid steady inflationary pressures and uncertainty over the war in Ukraine.

But, in this pandemic recovery, nothing ever seems to be what it is, as employment has continually risen in 2022.

Total nonfarm payroll employment rose by 431,000 in March, as job gains continued in
leisure and hospitality, professional and business services, retail trade, and
manufacturing. Overall, job growth averaged 562,000 per month in the first quarter of
2022, the same as the average monthly gain for 2021.

Economists believe that there is an asterisk due to inventory hoarding last quarter that is screwing up the GDP metric.

Among the factors dragging down the economy at the beginning of 2022 were a reduction in retailers’ inventory purchases and a growing gap between U.S. exports and imports. The country’s trade deficit for goods — the difference between incoming and outgoing products — widened to a record high in March, the Commerce Department reported this week.

In addition, many businesses bought less inventory than they normally would in early 2022, because they had leftover merchandise from late last year, when they stocked up on extra goods to guard against supply chain shortages and delays. That drop in purchasing is likely to artificially drag down GDP numbers, economists say.

 

[Politesse]

Assessments of how "The Economy" is doing don't care whether poor people have jobs, it's about how much money ten thousand or so very wealthy people are making. Sure, people may be happy that they're renting a hovel instead of out on the street, but it won't move the needle much on the most important qualitative acronyms. As Robbie Kennedy once put it, GDP measures everything except what makes life worth living. But completely coincidentally and definitely not as a result of a plutocratic conspiracy he was shot to death three months after he said that, so what did he know about living your best life?

 

[Elixir]

Economists believe that there is an asterisk due to inventory hoarding last quarter that is screwing up the GDP metric

There are also factors related to Pootey’s idiotic war.

 

[ZiprHead]

It's estimated Greg Abbot's border stunt cost the country over nine billion dollars.

 

[laughing dog]

Initial estimates of GDP growth are subject to revision as more data becomes available. I would not be surprised to see a revision that reverses the sign on the growth rate.

 

[bilby]

Most macroeconomic measures, such as GDP, are aggregations of guesses, distortions, and outright lies reported by corporations whose executives don't even have a good grasp on their own operations.

At each level from the shop floor to the boardroom, the figures get 'adjusted' on the basis of such objective measures as 'what the boss thinks his boss wants to see' and 'what the sales manager requires the figures to be in order to qualify for his bonus'.

Aggregation of nonsense pseudo-data at the very best might give us a hint of what is going on; But frankly it's not really useful or actionable in any way. Fortunately, its not actually used or acted upon; Rather, it is used as support for whatever the various politicians wanted to support, or as ammunition against whatever they wanted to oppose. So regardless of the data, politicians will do whatever they wanted to do.

It's a well known fact that all movements of economic indicators, in any direction, are a clear indication of an unfolding disaster, and/or of massive success and burgeoning prosperity, depending on which each individual commentator needs them to be.

 

[Swammerdami]

I forgot (or never knew) the details of GDP computation. I guess inventory in wholesalers' or users' warehouses counts as product, but unsold manufacturers' inventory does not? What if there are letters of intent to purchase?

It's estimated Greg Abbot's border stunt cost the country over nine billion dollars.

Don't forget that breaking windows boosts GDP if the windows are replaced. Big oil spills increase GDP! (Labor spent cleaning up counts as "product.")

These are just a few of several reasons why emphasis on GDP is misplaced.

 

[southernhybrid]

Oddly enough, despite the little drop in GDP, the stock market roared upwards yesterday. Imo, despite owning a few stocks, the market is a big, casino. Unless you have the talent to day trade, which looks intensely stressful to me, it's easy to lose a lot of money in the market. The current economic indicators are weird, but then economics isn't a pure science so it's hard to try to make sense of it. A lot of is political, imo. You have economists on the left and on the right. It's crazy.

 

[Elixir]

Oddly enough, despite the little drop in GDP, the stock market roared upwards yesterday. Imo, despite owning a few stocks, the market is a big, casino. Unless you have the talent to day trade, which looks intensely stressful to me, it's easy to lose a lot of money in the market.

Only in the short term. Over 5 year periods it’s pretty safe. But if you have to sell at the bottom, yeah, that sucks.

Redirect Notice

 

[ZiprHead]

In news that tickle the berries of the Alt-Right and GOP, the US GDP dropped 1.4% last quarter. This means we could technically be in a recession.

The U.S. economy unexpectedly shrank at a 1.4 percent annualized rate in the first three months of 2022 after more than a year of rapid growth, according to a Bureau of Economic Analysis report released Thursday. The new data is fueling concerns about a recession amid steady inflationary pressures and uncertainty over the war in Ukraine.

But, in this pandemic recovery, nothing ever seems to be what it is, as employment has continually risen in 2022.

Total nonfarm payroll employment rose by 431,000 in March, as job gains continued in
leisure and hospitality, professional and business services, retail trade, and
manufacturing. Overall, job growth averaged 562,000 per month in the first quarter of
2022, the same as the average monthly gain for 2021.

Economists believe that there is an asterisk due to inventory hoarding last quarter that is screwing up the GDP metric.

Among the factors dragging down the economy at the beginning of 2022 were a reduction in retailers’ inventory purchases and a growing gap between U.S. exports and imports. The country’s trade deficit for goods — the difference between incoming and outgoing products — widened to a record high in March, the Commerce Department reported this week.

In addition, many businesses bought less inventory than they normally would in early 2022, because they had leftover merchandise from late last year, when they stocked up on extra goods to guard against supply chain shortages and delays. That drop in purchasing is likely to artificially drag down GDP numbers, economists say.

I'll wait for the revised numbers to come out.

 

[laughing dog]

I forgot (or never knew) the details of GDP computation. I guess inventory in wholesalers' or users' warehouses counts as product, but unsold manufacturers' inventory does not? What if there are letters of intent to purchase?

GDP is measures the current PRODUCTION of final goods of services during the specified time period. The stock of inventories is not included in the measure of GDP because something may have been produced in an earlier time period. The change in business inventories is used based on the rationale that a current increase in business inventories represents current production, while a reduction in business inventories represents negative investment in inventories.

Getting accurate measures of the change in actual business inventories (not letters of intent to purchase) is difficult to obtain on a timely basis for the entire economy. That estimate tends to get the largest revisions after more data is received.

 

[southernhybrid]

Oddly enough, despite the little drop in GDP, the stock market roared upwards yesterday. Imo, despite owning a few stocks, the market is a big, casino. Unless you have the talent to day trade, which looks intensely stressful to me, it's easy to lose a lot of money in the market.

Only in the short term. Over 5 year periods it’s pretty safe. But if you have to sell at the bottom, yeah, that sucks.

Redirect Notice

It all depends on which stocks you have and when you sell them, how patient you are, etc. Let's just say that I'm married to a person who isn't patient when it comes to holding stocks. My bro in law lost nearly a million bucks in the market back around 2006. Since he makes a high salary as a dentist, he's made up for it. Recently, he's been bragging about how much his stocks are up. But, we haven't heard from him since the market has become so volatile. He never admits his losses.

One has to be very careful and very patient to do well in the market, unless one is very talented at day trading. I'm not a risk taker.

Did you notice the Dow dropped almost 1000 points today?

 

[Elixir]

I “lost” a couple hundred back then in the Bush depression. But the very next couple of years got it almost all back. I was cash poor and had to sell some in 2008, and that hurt. But that was my lack of foresight about needing the cash, not lack of market foresight. And the investment in our startup eventually paid handsomely. Nowadays I’m older, and taking a stance of always keeping a couple years worth of “safe” investments (money market funds, tax free muni bonds etc) and take the inflation hit as the price of safety but remain able to weather volatility and sharp downturns like we have now. If the markets collapse entirely I’ll be able to hold off selling equities for quite a while.
I think a wise course needs to be tailored to a person’s future earnings outlook, obligate expense levels and of course aspirations.
In my old age (72) I’m becoming very disenchanted with owning (being responsible for) stuff, and have little taste for lavish living. Lowered aspirations make my situation fairly comfortable despite little to no future earning guarantees. If I wanted to, I could even jet off to the South Pacific and lounge on a beach with umbrella drinks for a month or few, and get reminded why I don’t want to do that. Food clothing and shelter are things that only complete societal collapse will deprive me of, so … why worry? I’ve been happy with so much less.

 

[Elixir]

.

Did you notice the Dow dropped almost 1000 points today?

Sure. I expected it after the aberrant surge yesterday. We are probably headed for a protracted recession/depression. I’m hoping that makes real estate investments very attractive because I’m going to put my rental property up for sale in June. And am toying with selling out the property we live on, which is almost certainly worth more to someone else now than it is to us. If I was younger, I’d probably hold on to it, but I don’t need the brain damage.

 

[Metaphor]

Most macroeconomic measures, such as GDP, are aggregations of guesses, distortions, and outright lies reported by corporations whose executives don't even have a good grasp on their own operations.

This is a grossly dishonest and ignorant statement.

I'm going to pull epistemological rank on bilby. I've worked in the government department in Australia that produces the GDP. bilby has some fantasy universe conception of GDP measures that do not accord with reality.

 

[Swammerdami]

. . . Imo, despite owning a few stocks, the market is a big, casino. Unless you have the talent to day trade, which looks intensely stressful to me, it's easy to lose a lot of money in the market.

Most investment advisors would give the OPPOSITE advice. Buying and holding the best U.S. companies is a strategy which has always done well except in the late 1920's and very early 1930's. A large portion of "day traders" are fooling themselves: Even the "successful" ones may just be "picking up pennies in front of a steam roller." Warren Buffett is the epitome of successful stock investor; and he is the opposite of a day trader.

(Optimists like to repeat a mantra like "buying and HOLDING stocks for at least 20 years is ALWAYS winning play." They forget to qualify this as U.S. stocks. For much of the 19th and 20th centuries, buying and holding German stocks for at least 20 years was always LOSING play!)

 

[Harry Bosch]

. . . Imo, despite owning a few stocks, the market is a big, casino. Unless you have the talent to day trade, which looks intensely stressful to me, it's easy to lose a lot of money in the market.

Most investment advisors would give the OPPOSITE advice. Buying and holding the best U.S. companies is a strategy which has always done well except in the late 1920's and very early 1930's. A large portion of "day traders" are fooling themselves: Even the "successful" ones may just be "picking up pennies in front of a steam roller." Warren Buffett is the epitome of successful stock investor; and he is the opposite of a day trader.

(Optimists like to repeat a mantra like "buying and HOLDING stocks for at least 20 years is ALWAYS winning play." They forget to qualify this as U.S. stocks. For much of the 19th and 20th centuries, buying and holding German stocks for at least 20 years was always LOSING play!)

Yep, you are a 1,000 percent correct. The very best strategy is to buy on down markets, sell on up. But this is very difficult to do and requires lots of time. For most people, simply develop a sound strategy that fits your goals and risk tolerance (or hire an investment specialist to help you); implement your plan; check the results and possibly shift funds to keep the plan once a quarter at most; buy and hold; don't watch the news. If you do this, you'll beat most professional stock pickers. There's never been a 10-year period in the US history where bonds outperformed stocks.

 

[southernhybrid]

. . . Imo, despite owning a few stocks, the market is a big, casino. Unless you have the talent to day trade, which looks intensely stressful to me, it's easy to lose a lot of money in the market.

Most investment advisors would give the OPPOSITE advice. Buying and holding the best U.S. companies is a strategy which has always done well except in the late 1920's and very early 1930's. A large portion of "day traders" are fooling themselves: Even the "successful" ones may just be "picking up pennies in front of a steam roller." Warren Buffett is the epitome of successful stock investor; and he is the opposite of a day trader.

(Optimists like to repeat a mantra like "buying and HOLDING stocks for at least 20 years is ALWAYS winning play." They forget to qualify this as U.S. stocks. For much of the 19th and 20th centuries, buying and holding German stocks for at least 20 years was always LOSING play!)

Yep, you are a 1,000 percent correct. The very best strategy is to buy on down markets, sell on up. But this is very difficult to do and requires lots of time. For most people, simply develop a sound strategy that fits your goals and risk tolerance (or hire an investment specialist to help you); implement your plan; check the results and possibly shift funds to keep the plan once a quarter at most; buy and hold; don't watch the news. If you do this, you'll beat most professional stock pickers. There's never been a 10-year period in the US history where bonds outperformed stocks.

Of course, day trading doesn't work for most people. It's a tedious job that takes a lot of talent. Sure, Buffet has a special talent for buying mostly conservative stocks and holding them for years. He started investing when he was very young. He's said that he considers himself lucky to. have been born with a special talent for investing. It's just too easy for the average person to lose money in the market. I didn't mean to suggest that day trading works well for many people. Right now, the market is so volatile that It's hard to know what to do. That is the only reason I mentioned day trading. Day or short term traders, love volatility.

There is one stock that I bought when it was extremely low. I sold it when Trump was elected because I was afraid the market would tank. My bad. I did buy it back a few years ago, and it's done well, but at my age, I feel safer leaving my money in savings. People my age are happy to see interest rates rising. The low rates did. help a lot of people buy homes, but unfortunately, investors bought up a huge percentage of homes in cities like Atlanta, driving up the prices of homes, along with rents. There are so many reasons why the economy looks both good and bad at the same time.

Btw, the biggest mistake that small investors make is holding on to a stock as it tanks. Sometimes you just have to face reality and sell a stock at a loss, instead of watching it tank down even more. Remember the crash of 1987. Remember what happened to tech stocks around 1999? The market is always risky, sometimes even when you follow the best advice. The market might do better than bonds over all, but you have to have the right stocks or you can lose your ass. At my age, I'd prefer not to take so many risks.

What was this thread about again?

 

[Harry Bosch]

. . . Imo, despite owning a few stocks, the market is a big, casino. Unless you have the talent to day trade, which looks intensely stressful to me, it's easy to lose a lot of money in the market.

Most investment advisors would give the OPPOSITE advice. Buying and holding the best U.S. companies is a strategy which has always done well except in the late 1920's and very early 1930's. A large portion of "day traders" are fooling themselves: Even the "successful" ones may just be "picking up pennies in front of a steam roller." Warren Buffett is the epitome of successful stock investor; and he is the opposite of a day trader.

(Optimists like to repeat a mantra like "buying and HOLDING stocks for at least 20 years is ALWAYS winning play." They forget to qualify this as U.S. stocks. For much of the 19th and 20th centuries, buying and holding German stocks for at least 20 years was always LOSING play!)

Yep, you are a 1,000 percent correct. The very best strategy is to buy on down markets, sell on up. But this is very difficult to do and requires lots of time. For most people, simply develop a sound strategy that fits your goals and risk tolerance (or hire an investment specialist to help you); implement your plan; check the results and possibly shift funds to keep the plan once a quarter at most; buy and hold; don't watch the news. If you do this, you'll beat most professional stock pickers. There's never been a 10-year period in the US history where bonds outperformed stocks.

Of course, day trading doesn't work for most people. It's a tedious job that takes a lot of talent. Sure, Buffet has a special talent for buying mostly conservative stocks and holding them for years. He started investing when he was very young. He's said that he considers himself lucky to. have been born with a special talent for investing. It's just too easy for the average person to lose money in the market. I didn't mean to suggest that day trading works well for many people. Right now, the market is so volatile that It's hard to know what to do. That is the only reason I mentioned day trading. Day or short term traders, love volatility.

There is one stock that I bought when it was extremely low. I sold it when Trump was elected because I was afraid the market would tank. My bad. I did buy it back a few years ago, and it's done well, but at my age, I feel safer leaving my money in savings. People my age are happy to see interest rates rising. The low rates did. help a lot of people buy homes, but unfortunately, investors bought up a huge percentage of homes in cities like Atlanta, driving up the prices of homes, along with rents. There are so many reasons why the economy looks both good and bad at the same time.

Btw, the biggest mistake that small investors make is holding on to a stock as it tanks. Sometimes you just have to face reality and sell a stock at a loss, instead of watching it tank down even more. Remember the crash of 1987. Remember what happened to tech stocks around 1999? The market is always risky, sometimes even when you follow the best advice. The market might do better than bonds over all, but you have to have the right stocks or you can lose your ass. At my age, I'd prefer not to take so many risks.

What was this thread about again?

Well, when I say stocks, I'm really talking about mutual funds. If you buy individual stocks, and that company goes down, you're hosed. IMO (I'm not a professional) the biggest mistake small investors make is buying into the stock market, then selling when there is a dip. Small investors tend to only buy when the market is going up; sell when it goes down. Not a sound strategy. I remember well the crash of 87; the crash after 9-11; the tech crash. People who sold during these periods lost their ass. I didn't sell. I still have most of those tech stocks. They've been my best long term performers. Having said that, people should only invest up to their risk tolerance. My neighbor won't invest in the stock market. He tends to check his investments every day. He has no tolerance for risk. He's 29!! But you have to do what allows you to sleep at night!

 

[Elixir]

Day traders say they sleep well, but I doubt it. Too many times their week consists of four wins and one loss, and they wake up on Saturday no further ahead than they were on Tuesday, having fretted and agonized over hour-to-hour vacillations all week. Guess it’s okay for some types but it would make me crazy. I’d rather work for a living.