As US Private Economy is Growing, US Govt Economy is Slowing….Good
- Posted by ToddSullivan
- on August 6th, 2012
One of the reasons I like Brian Wesbury’s approach to economic data is his more detailed parsing of the various components which are often ignored by the main stream crowd. He is the only economist known for separating the Private vs. Government components of US GDP. I have performed a similar analysis in the charts below in which Chart 1 presents GDPxFed Spending vs. Fed Spending YoY Rate over the period of Jan 1960-Present and Chart 2 adds GDP to GDPxFed Spending vs. Fed Spending YoY Rate over the period of Jan 2000-Present such that one can see our current situation with greater detail.
Looking at Chart 1 it should be obvious that Federal Spending growth spikes during periods of weakness in GDPxFed Spending (Private GDP component). It should also be obvious that after these spikes, Federal Spending growth subsides dramatically.
In Chart 2, GDP is compared to the Private and Government components over the of Jan 2000-Present to reveal current trends. What should be clear is that the Private economy is doing much better than many believe having hit 5.2% YoY (Year over Year) growth as of Dec 2012 while Government Spending showed a negative -2.8% YoY growth. This is good!
Our economy is much better than most believe and is behaving as it has always behaved in the past regardless of the continuing “Doom and Gloom” forecasting which permeates the media. Business Cycle Value Investors know that the best knowledge one can have is to parse the details. Rather than only looking at the “Forest”, Value Investors also look at the “Trees”. The Private GDP component is looking quite positive! It is the Private component which the stock market represents. The stock market should be much higher with the good news that we are seeing by this analysis. We should also rejoice that the Government component which is much less productive is becoming less of a drag on the overall economy.
To see more posts on any of the companies mentioned in this article, enter their stock ticker symbol in the search box.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Todd's investing strategy is essentially long with the rare short. He seeks to buy undervalued issues with an upcoming catalyst that will help them realized.... More »
aapl acas ackman aig AN bac BAM bbep BBI bgp BPO buffett CC CODi CRE davidson dow einhorn employment ETFC f ggp hhc housing IGOI jcp jmba joe mbi mcd mgm MO oesx pld PM rail sbux seth klarman SHLD spg spy theory trade VIC xom
- Tuesday links: the secret of SEO | Abnormal Returns on The Private Economy is Doing Just Fine
- The Expansion and Employment | ValuePlays on Housing Thoughts & New Home Supply Sinks to 4.1mos
- Housing Bubble Hysteria: Facts Versus Ficton » CanuckPost.com on Why I Am Cautiously Optimistic About 2010 $$
- CRM Still Thinks -1 + -1 = 2 | ValuePlays on What Did CRM Buy in Buddy Media?? Increasing Losses and Cash Serious Flow Drain…
- Student Loans Won’t Kill Housing Recovery – ValueWalk | on Student Loans and Housing