Thursday, April 30, 2009
Executive Summary
- GDP report for 1Q2009 is a mess of Fuzzy Numbers.
- The surprising 2.2% increase in PCE, or Personal Consumption Expenditures, is discussed.
- Ostensible signs suggest that the bottom is in, but the numbers do not line up at all with hard, factual data.
- Sales tax receipts declined in first quarter.
- The GDP report for the first quarter of 2009 is in serious conflict with actual state sales tax data.
- Vehicle sales are down nearly twice as much as the 19% claimed by the BEA.
- The extent to which investors are fooled by these government reports is the extent to which they risk losing a lot of money in the stock market.
- Trust yourself.
As attendees of my seminars and regular readers know, I am deeply critical of the cheerleading spin cycle that exists between the government and the media, because it often inappropriately mixes facts, opinions, and beliefs. The aim, it would appear, is to foster optimism or confidence in the average investor.
Of course, as chronicled here many times, Wall Street lives off of the fees and products that it sells to retail investors, while the political machine favors a pacified, if not buoyant, electorate. Both of these aims are served by constantly spinning things to the upside.
While it is possible that "investors" are indeed optimistic, focusing on the "slightly more upbeat" report from the Fed and "signs that consumer spending rebounded," these claims deserve a bit of exploration.
by davos