Data Front: We're Not Seeing The Growth Economists Predicted
Lance Roberts | Nov 26, 2012 02:17PM ET
In a post by my friend Cullen Roche at PragCap he pointed out that many economists are suggesting that the second estimate of Q3 GDP, which showed an initial estimate of 2.0% annualized growth, will be revised sharply upward to 2.8%. This 2.8% bump in annualized growth comes on the heels of a very sluggish Q2 growth rate of 1.3%. If Cullen's observations of economic growth in the third quarter is correct it suggests much more than just a mild pickup in the economic underpinnings of personal consumption expenditures, private investment, government spending and net exports but rather something much more material. This would be welcome news for the millions of individuals on extended unemployment gains as such a surge in economic activity will be reflected by increasing employment as businesses gear up to meet increasing demand.
The problem is that the surge in demand isn't materializing at the manufacturing level. For example, it is last week , what is important is where the trend of the data is going.
The headwinds to economic growth are gaining strength as the tailwinds from stimulus-related support programs fade. Increasing tax rates, implementation of ObamaCare, increased regulations and Euro-zone related weakness on exports all drag on future economic growth. Later this week we will get the second estimate of third quarter GDP, which will give us some clues about the real direction and strength of the economy. While I sincerely hope that the majority of economists are correct in their assumptions -- I have a nagging suspicion that we might be disappointed with the actual number.
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