Friday, July 30, 2010


Part of the Ritholtz blog that is so awesome yet not intuitively read by all is the Macronotes written by super economist Peter Boockvar...

It's one of the few places you can go to get behind the headlines of whatever economic data is released everyday. He also gives a great glimpse into the Foreign markets everyday including foreign bond offerings and spreads etc...anyway if you have become addicted to sure to stop into Macronotes everyday as well.

Today Boockvar gave us a good glimpse into GDP:
Real Q2 GDP rose 2.4% vs expectations of 2.6% but Nominal GDP was better, up 4.2% vs the forecast of 3.7% as the price deflator rose 1.8%, .7% more than expected. Personal consumption rose 1.6%, which was below the expected gain of 2.4% but gross private investment rose a solid 28.8% led by a 21.9% rise in spending on equipment and software. GPI added 3.1 %pts to GDP. Also helping this component, non residential construction rose 5.2% and residential (helped by tax credit) rose by 27.9%. The rise in inventories added 1 % pt to GDP and Government spending added .9% led by Federal. Trade reduced GDP by 2.8 % pts. Real Final Sales, which takes out the impact of inventories, rose 1.3% and has been sluggish in the expansion over the past year where the 15 yr avg is 2.6%. Also included in the data are revisions for the past few yrs which saw Q1 GDP rise 3.7% instead of 2.7%. Bottom line, key contributors to Q2 GDP growth was government largesse as seen by the 4.4% gain in government spending and the large boost in residential construction mostly due to the home buying tax credit. Personal Spending was well below expectations and the rising trade deficit was also a drag. A key bright spot was the 21.9% rise in spending on equipment and software.

The key there is the spending on equipment and software...while that is usually manufactured overseas...eventually you need people to support companies in running the equipment and perhaps eventually you need a buncha people to help run this new software and fix it and this is the "service" part of the service economy this country has.

The other thing that I keep hearing about is regulation and how bad it is. I work in a regulated industry, if anything regulation creates jobs because you need people to study and then implement and then ensure compliance with the new regulations.

I once caught up with an old friend who I used to play street hockey with. He told me his job was "Sarb-Ox" meaning he worked for a bank and his job was related to the implementation of Sarb-Ox.

If people aren't hiring then Government regulation is one way to force them to hire people to figure these crazy laws regulation is not a bad thing for the economy. Particularly for the economy we have setup in this country where everyone's skill-set and cost of living seems to revolve around "management" rather than use of hands.

Anyway that's all I have to say about that.

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