dollarcollapse.com / By John Rubino / February 28, 2013
The US economy stalled in the 4th quarter, but the analysis that accompanied the latest (slightly positive) GDP revision seemed to imply that the reasons for the weakness – a drawdown of inventories and lower defense spending – would be reversed out in coming months, making 2013 a pretty good year.
But the Consumer Metrics Institute, in its latest take on the data, argues that this year is more likely to be an extended version of Q4. Here’s an excerpt from the much longer report which is available here.
Despite the new-found minuscule “growth” reported in this release, there are ample reasons to remain cautious about the economy:
– Even as revised this data represents an economy that is statistically in a dead stall, “growing” at a rate some 3% less than during the prior quarter (the greatest downward quarter-to-quarter change since the fourth quarter of 2008).
– This data is still reporting 4Q-2012, a quarter that in retrospect may be viewed as the last gasp of the “Great Recovery” — before there were significant economic headwinds created by reductions in consumer take-home pay, rising gas prices, sequestered federal spending and accelerating contractions in global trade. If all other components of the economy stay the same, those factors alone could remove something like 3% from real-time economic “growth” by the end of the first quarter of 2013: the normalization of FICA deductions alone could reduce consumer spending enough to pull the headline number down by 1%, the $.50 per gallon increase in gas prices could similarly remove another 0.5% from the headline number, weakening exports could easily reduce the headline number by another 1% and the federal budget sequestrations — if fully implemented and sustained — should eventually pull (at maximum, despite doomsday rhetoric) an additional 0.5% from the headline number.
Thanks to BrotherJohnF