US Q1 advance GDP due at 1.30 today....

chucky

markets liked it for these reasons -

This latest indicator on the strength of the world’s largest economy is all the more surprising given that consumer spending grew by 2.2% in the first three month of 2009, clawing back some of the 4.3% slump in the previous quarter.

The result might have been even worse had the fall in imports not outstripped the decline in US exports.

http://www.digitallook.com/news/2745430/US_economy_shrinks_6.1_in_Q1.html?username=&ac=

inspector_monkfish

chucky wrote: »

markets liked it for these reasons -




http://www.digitallook.com/news/2745430/US_economy_shrinks_6.1_in_Q1.html?username=&ac=

could all change after FOMC tonight :eek:

StevieJ

A lot of the decline in the UK and the US GDP is a result of a rundown in stock levels, this can only go so far, once stocks are reduced to the minimum we will see improved performance.

chucky

StevieJ wrote: »

A lot of the decline in the UK and the US GDP is a result of a rundown in stock levels, this can only go so far, once stocks are reduced to the minimum we will see improved performance.

once these are at low levels the inventories will have to be stocked up again - be prepared for a big spike in GDP for that coming quarter.

StevieJ

chucky wrote: »

once these are at low levels the inventories will have to be stocked up again - be prepared for a big spike in GDP for that coming quarter.

Or at the minimum they will have to supply sales from production.

mewbie_2

StevieJ wrote: »

Or at the minimum they will have to supply sales from production.

Don't take this the wrong (bear) way, but I wonder how years worth of Toyotas, Hondas, Vauxhalls, etc. there are standing around waiting to be sold.

StevieJ

mewbie wrote: »

Don't take this the wrong (bear) way, but I wonder how years worth of Toyotas, Hondas, Vauxhalls, etc. there are standing around waiting to be sold.

I agree but it has been happening with smaller ticket items as well, the motor industry is a basket casedue to the historical reliance on credit to support sales due to the high value.

Generali

Not just falling inventories hitting US GDP:

http://news.bbc.co.uk/2/hi/business/8024839.stm

Exports fell by 30%, the Commerce Department said....

Of course trade is facilitated by credit....

purch

once these are at low levels the inventories will have to be stocked up again - be prepared for a big spike in GDP for that coming quarter

once stocks are reduced to the minimum we will see improved performance.

Chaps....

Where will the credit come from to re-stock Inventories ?

Without a restoration of Credit there will be no recovery !!

michaels

purch wrote: »

Chaps....

Where will the credit come from to re-stock Inventories ?

Without a restoration of Credit there will be no recovery !!

Don't need to restock inventories - even with building to sell still need to produce 70% of cars and obviously more of other things as retail demand is up year on year.

Fairly basic maths says with a stocks and flows model shows that with even a small reduction final product demand and lumpy adjustment in stocks will see a real v shape in output. Credit crunch will have exacerbated this as unexpected run up in stocks and increase in cost of carrying stock happened simultaneously.

For example Honda 4 month shut down does not suggest no civics are currently being sold but that production was not cut nearly quickly enough and the economics of car plant operation mean than the factory needs to be on or off. Once the plant comes back on stream, even if only at 75% it will still show up as a big jump in industrial production.

Hence the Japanese and Germans who's economies are geared towards manufacturing have been so badly hit in the last 2 Qs.

Edit: With the Mexican flu though consumer demand could easily tank at which point all recovery bets are off...