The Lehmann
Letter (SM)
Today’s GDP
report reconfirms our bifurcated economy. Throughout the recovery some data has
been strong while other data has been weak.
Sad news
first: GDP grew by 1.9% in the first quarter.
The really sad
news: GDP growth would have been higher had it not been for government’s
continued contraction.
Government
spending has fallen since the beginning of 2010. That's too bad because
government spending is within our direct control and could have grown had we
desired that. We can't do much about housing or business investment, but we can
and could have seen to it that government expanded. Government could have been
the balloon that lifted us higher. Instead it has been the anchor that has held
us back.
The good
news: This report reconfirms the significant increase in corporate profits to
$1,644.9 billion. Take a look at the chart and you will see that this is a big
jump. It appeared that earnings had stalled at $1,500 billion or less. Now they
are off the chart.
Profits
(Click on
chart to enlarge)
(Recessions
shaded)
Once again we
have a bifurcated economy: Some reports have been strong, others weak. That's
not good enough, but it certainly could have been worse.
(To be fully
informed visit http://www.beyourowneconomist.com/)
© 2012
Michael B. Lehmann
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