We already knew GDP was coming out and that it was going to be bad. At least it was not an echo of the -5.5% GDP drop seen in Q1. The preliminary GDP came in at only -1.0% for the preliminary Q2 data. We had penciled in roughly -1.5% as the estimate. Unfortunately, it is the details that are not very attractive if you start to back some data out.
But here is the issue, the change in calculation took the Q1 data down to -6.4% from -5.5%, and we saw a drop to -5.4% in the Q4-2008 data.
A key issue here is that inventory liquidations took out less from the GDP reading in Q2 than it did in Q1. Trade was a boost to GDP in Q2, which adding 1.38 percentage points to the overall reading. Exports fell by 7.0%, while imports were down 15.1%.
It seems that Uncle Sam also gave this an added jump. Federal government spending gave GDP a boost with a gain of 10.9%.
It seems that this less-bad nominal report is not doing anything for stocks. We were up in the pre-market levels, and now DJIA and S&P futures are in negative territory.
The real takeaway here is what lies ahead, and these numbers are all looking backwards in time. As we noted yesterday, the recession is over. We just have to watch out for that double-dip.
Jon C. Ogg
July 31, 2009
Top Gaining Stocks
Top Losing Stocks