GDP Review, forecast for Q3-Q4

[icm63]

Lets review USA GDP by chart1 panel.

Panel 1 – USA GDP (blue) and GDP less Exports (red)

From 2003 onwards exports have been more and more important for the USA economy, in fact if it was not for exports, the USA GDP would be ZERO on the latest reading.

The latest GDP report had the GDP deflator at 1.1% yet the Personal consumption expenditure at 4.3%, (See chart2 below) history has shown that these track very close together, but recently they have diverged, 2008 Q2. I would assume that the GDP deflator to be revised upwards and adding negative points on the GDP calculation.

Panel 3 – Inventories Change (mustard ?)

This is showing that business are not stocking up, thus expecting demand to wane. All recession periods shows a negative inventories effect.

Panel 4 – Non Residential (blue) and Residential Fixed investment (pink)

As you know housing is in depression, clearly shown by the pink line. I think with the commercial lending standards tightening it is only a matter of time before the blue (commercial property) sinks into recession territory.

Panel 5 – Consumer Consumption (red)

Consumption is already at the 1991 recession levels. I have heard that the investor should never bet against the American Consumer, well this time I will. There seams to be a correlation between Residential Fixeds investment (pink line panel 4) and consumption, and at the moment they are both falling. I expect consumer top zero out before Xmas 2008.

Panel 6 – Exports (green) and Imports (pink)

Imports are falling in line with consumer consumption. Exports are hold up well, the recently USD dollar rally wont help this number, in Q3 and Q4, so expect both imports and exports to fall.

I cant see how USA can miss a recession in Q3 and Q4, can you?