Please read paraghraph 4. Can anyone tell me how this happened when we just passed over $1 trillion is “stimulus” packages?
GROSS DOMESTIC PRODUCT: FIRST QUARTER 2009 (ADVANCE)
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of 6.1 percent in the first quarter of 2009, (that is, from the fourth quarter to the first quarter), according to advance estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP decreased 6.3 percent.
The Bureau emphasized that the first-quarter “advance” estimates are based on source data that are incomplete or subject to further revision by the source agency (see the box on page 4). The first- quarter “preliminary” estimates, based on more comprehensive data, will be released on May 29, 2009.
The decrease in real GDP in the first quarter primarily reflected negative contributions from exports, private inventory investment, equipment and software, nonresidential structures, and residential fixed investment that were partly offset by a positive contribution from personal consumption expenditures (PCE). Imports, which are a subtraction in the calculation of GDP, decreased.
The slightly smaller decrease in real GDP in the first quarter than in the fourth reflected an upturn in PCE for durable and nondurable goods and a larger decrease in imports that were mostly offset by larger decreases in private inventory investment and in nonresidential structures and a downturn in federal government spending.
Motor vehicle output subtracted 1.36 percentage points from the first-quarter change in real GDP after subtracting 2.01 percentage points from the fourth-quarter change. Final sales of computers added 0.05 percentage point to the first-quarter change in real GDP after subtracting 0.02 percentage point from the fourth-quarter change.
Wasn’t this stimulus supposed to be for “shovel ready” projects? Clearly that was not the case.
Here is further breakdown of Gov’t spending both Federal and Local (comps are to Q4 2008):
Real federal government consumption expenditures and gross investment decreased 4.0 percent in the first quarter, in contrast to an increase of 7.0 percent in the fourth. Real state and local government consumption expenditures and gross investment decreased 3.9 percent, compared with a decrease of 2.0 percent.
This gives huge merit to those who made the arguments as this package was being passed that this stimulus was not “Keynesian” even by the most liberal definition of it. For, if it was, we would not have seen decreases in spending.
Now we have to wait until revisions (ought not mater much) and then Q2 numbers. If there is not a significant jump (ought to be a record amount to match the size of the “stimulus”) in government spending in Q2, those who thought this was a good idea got hosed….big time.
Disclosure (“none” means no position):