Gold News

About Those US GDP Figures...

Going deeper into debt is actually a good thing. Apparently...

TEAM OBAMA celebrated the latest GDP news last week, notes Bill Bonner in his Daily Reckoning.

The US economy expanded more than forecast in the third quarter. 

Bloomberg was on the case:

'The US economy expanded more than forecast in the third quarter, paced by a pickup in consumer spending, a rebound in government outlays and gains in residential construction. Gross domestic product rose at a 2 percent annual rate after climbing 1.3 percent in the prior quarter, Commerce Department figures showed today. Michael McKee and Betty Liu report on Bloomberg Television's "In the Loop".

'Gross domestic product, the value of all goods and services produced in the US, rose at a 2 percent annual rate after climbing 1.3 percent in the prior quarter, Commerce Department figures showed today in Washington. The median forecast of 86 economists surveyed by Bloomberg called for a 1.8 percent gain.'

With the figure for the third quarter now in, it puts the growth rate for the year at 1.7%.

Wait a minute. As the Wall Street Journal put it, 'we borrowed $5 trillion and all we got was this lousy 1.7% growth.'

But it's worse than that. Of the third quarter's growth, at least a third of it is attributable to growth in government spending. The feds increased their own outlays at a 9.6% rate. Take that out of the picture and the private sector is growing at a 1.3% rate.

This is described in the press as a "fragile recovery". But it is no recovery at all. It's a scam. The US population is growing at a 0.9% rate. That leaves actual growth per person at 0.4%.

And that's a figure that has already been twisted by seasonal, qualitative, substitutional and other "adjustments" that make it meaningless. In other words, there is so much fudge in the GDP figures that you can get tooth decay just looking at them.

And in the end, they just don't tell you anything worth knowing. In fact, they mislead you... so you think you know something when you really don't. Which is to say... they have negative information content.

Here's another headline from the New York Times that tells the tale:

'Rise in household debt might be sign of a strengthening recovery.'

Come again?

Yes, after falling for 14 quarters, now...for the last two months at least... households are stepping up to the checkout counter... credit cards in hand... and doing their patriotic duty. They are buying stuff. They are going deeper into debt. Auto loans, for example, are up almost 14% this year.

Since 2008 total household borrowing is going down. Now, it is going up again. And this, dear reader, is something economists and the press call a 'strengthening recovery'.

That is the trouble with this sad métier. We mean our sad trade - reporting on... and trying to understand... the world of money in the Age of Viagra. Anything that will get consumers pumped up is, apparently, a good thing. Anything that brings them to their senses... discouraging them from spending money they don't have on stuff they don't need... is bad.

How could it be, dear reader, that going deeper into debt is a good thing? How could genuine wealth and prosperity be built on a foundation of greater debt? How could people be better off when they are actually getting poorer? What kind of a recovery leads households to repeat the same mistakes they made in the bubble years?

Time to Buy Gold?...

New York Times best-selling finance author Bill Bonner founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group exposed and predicted some of the world's biggest shifts since, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and the election of President Trump (2016). Sharing his personal thoughts and opinions each day from 1999 in the globally successful Daily Reckoning and then his Diary of a Rogue Economist, Bonner now makes his views and ideas available alongside analysis from a small hand-picked team of specialists through Bonner Private Research.

See full archive of Bill Bonner articles

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