Thursday, 29 October 2015

U.S. GDP Q3 2015 Charts of The Day

The initial estimate of Q3 2015 GDP for the U.S. was published today. The internet is already packed with standard GDP commentary, so here are a few alternative charts and short comments to shed some more light on the numbers and related developments. 

Nominal GDP increases were fueled by a money supply that, as has become usual, outpaced GDP growth by a wide margin.

Personal spending made up the vast majority of the year on year increase in nominal GDP with private investments declining, again.

Real GDP growth, measured on a rolling 10-year basis, fell from Q2 and is together with Q1 the lowest ever reported based on data since 1947. 

Removing the effect of increased money supply (if we got richer by printing more money, why work at all?) the adjusted GDP growth is the lowest reported on a 10-year rolling basis based on data since 1981. 

Production, saving and investment create economic growth and prosperity, not ever increasing spending fueled by increased debt and reduced savings. 

Why invest when you can spend? Unintended consequence of a manic-depressive monetary policy making it difficult for businesses to plan? Capital consumption follows and with it yet lower future growth.

It is only too obvious that the new money brought to market through QE1, 2 and 3 during late 2008 to 2014 and the surge in bank credit growth since early 2014 is pushing stocks up significantly more than real economy investments...
W5000 as of 28 October 2015

...fueling the broader stock market to bubble levels well beyond those of 2000 and 2007.
W4500 as of 28 October 2015

Related: Why GDP Growth Will Slide For Years To Come

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