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Minor uprevisions of nominal growth and deflator from the first estimate end of January are a mathematical effect only.
Bad news: The quarterly deflator of QIV 2007 surges to 0.66 from 0.26 % in QIII. The yearly deflator rises to 2.62 from 2.39 % in QIII. This is too high, still above the 2 % level, but not in american eyes.
Another bad news is the slump of the nominal quarterly growth rate from 1.46 to 0.81 % in the fourth quarter. On a yearly basis this is a decline from 5.30 to 5.17 % - not so bad, since taken for itselve this still is a high level.
Subtracting gives the real rates, i.e. a plunge from 1.20 in the third quarter to only 0.16 % in the fourth, on a yearly basis from 2.84 to 2.47 %.
Annualising the two quarters of the second half of 2007, the deflator runs at 1.84 % (the optimal level), nominal growth at 4.54 %, but real growth at 2.72 % only.
This decline is disappointing, but no recession - the slump end of 2007 isn't entirely an inflation effect, unlike the first quarter 2007.
Summary: This slump to european levels is no recession, probably a reaction to the high levels of the preceding two summer quarters.But in the fourth quarter the high running commodity sectors were overcompensated for by ailing automotive, housing and financial sectors, which probably erased more than a full percentage point in the quarterly nominal rate. We think that the effects of the credit woes will be overcome only in the second half of 2008. So we anticipate a sluggish first half of 2008, but in the second the strong measures of the Fed will accelerate the american economy again. The tax breaks will contribute only a little - they are ill targetted.
We regret that the service
of this webpage has to be shut down from February onwards, since we lost DATASTREAM and IBES and therefore have no more actual charts. The first complete count of US GDP rates and defla-tors for QIV 2007 (including revisions of the calculation of deflators):
0.35% 0.43% 0.41% 0.52% 0.43% 0.90% 0.81% 0.76% 0.41% 0.50%
0.37% 0.36% 0.38% 0.55% 0.78% 0.32% 0.52% 0.54% 0.92% 0.93%
0.56% 0.80% 0.95% 0.65% 0.86% 0.87% 0.86% 0.86% 0.59% 0.43%
1.04% 0.66% 0.26% and now +0.66% are the quarterly GDP-defla-
tors since QII 99
1.46% 1.55% 2.04% 2.12% 2.29% 2.27% 2.18% 2.51% 2.41% 2.51%
2.06% 1.65% 1.61% 1.66% 2.08% 2.04% 2.19% 2.18% 2.32% 2.94%
2.98% 3.25% 3.27% 2.98% 3.28% 3.34% 3.24% 3.45% 3.18% 2.73%
2.92% 2.71% 2.39% and now +2.62% are the yearly GDP-deflators
1.17% 1.78% 0.25% 1.57% –0.11% 0.52% –0.12% 0.31% –0.35% 0.39%
0.68% 0.54% 0.59% 0.05% 0.30% 0.86% 1.82% 0.66% 0.73% 0.86%
0.15% 0.94% 1.20% and now +0.16% is the quarterly real GDP
4.43% 4.70% 4.08% 4.85% 3.52% 2.24% 1.86% 0.59% 0.35% 0.23%
1.03% 1.27% 2.22% 1.87% 1.49% 1.81% 3.05% 3.68% 4.12% 4.13%
3.17% 3.15% 3.18% 3.01% 3.22% 2.88% 3.31% 3.22% 2.37% 2.60%
1.55% 1.89% 2.84% and now +2.47% are the yearly real GDP-rates
1.52% 2.21% 1.15% 2.01% 0.40% 0.93% 0.68% 1.07% 0.06% 0.90%
1.05% 0.90% 0.97% 0.61% 1.08% 1.18% 2.35% 1.20% 1.66% 1.80%
1.46% 1.44% 1.72% 1.34% 1.96% 1.17% 2.04% 1.47% 0.85% 0.95%
1.19% 1.60% 1.46% and now +0.81% is the quarterly nominal GDP
5.96% 6.32% 6.21% 7.07% 5.89% 4.56% 4.07% 3.12% 2.77% 2.74%
3.11% 2.94% 3.87% 3.57% 3.60% 3.89% 5.31% 5.93% 6.54% 7.19%
6.25% 6.50% 6.56% 6.09% 6.62% 6.34% 6.67% 6.80% 5.64% 5.41%
4.53% 4.67% 5.30% and now +5.17% is the yearly nominal GDP
The numbers of this article no longer are taken from TF-DATASTREAM but directly from the webpage of the US Bureau of Economic Analysis. tries to continue this GDP service without charts.Bad news: The quarterly deflator of QIV 2007 surges to 0.63 from a revised 0.26 % in QIII. The yearly deflator rises to 2.60 from a revised 2.39 %. This is too high, still above the 2 % level, but not in american eyes.
Another bad news is the slump of the nominal quarterly growth rate from (uprevised) 1.46 to 0.79 % in the fourth quarter. On a yearly basis this is a decline from (uprevised) 5.30 to 5.14 % - not so bad, since taken for itselve this still is a high level.
Subtracting gives the real rates, i.e. a plunge from 1.20 in the third quarter to only 0.16 % in the fourth, on a yearly basis from 2.84 to 2.47 %.
Annualising the two quarters of the second half of 2007, the deflator runs at 1.78 % (the optimal level), nominal growth at 4.50 %, but real growth at 2.72 %.
This decline resembles the sluggish first quarter of 2007, but the different inflation pattern reveals the difference - the slump in the end of 2007 isn't entirely due to increased inflation.
Summary: This slump is no recession, probably a reaction to the high levels of the preceding two summer quarters only.But in the fourth quarter the high running commodity sectors were overcompensated for by the ailing automotive, housing and financial sector, which probably erased more than one percentage point in the quarterly nominal rate. We think that the effects of the credit woes will be overcome only in the second half of 2008.
We regret that this
service has to be closed down from February onwards. The first estimate of US GDP rates and deflators forQIV 2007 (including drastic up revisions of growth in QIII 2007):
0.35% 0.43% 0.41% 0.52% 0.43% 0.90% 0.81% 0.76% 0.41% 0.50%
0.37% 0.36% 0.38% 0.55% 0.78% 0.32% 0.52% 0.54% 0.92% 0.93%
0.56% 0.80% 0.95% 0.64% 0.85% 0.87% 0.85% 0.86% 0.58% 0.42%
1.04% 0.65% 0.26% and now +0.63% are the quarterly GDP-defla-
tors since QII 99
1.46% 1.55% 2.04% 2.12% 2.29% 2.27% 2.18% 2.51% 2.41% 2.51%
2.06% 1.65% 1.61% 1.66% 2.08% 2.04% 2.19% 2.18% 2.32% 2.94%
2.98% 3.25% 3.28% 2.99% 3.29% 3.36% 3.25% 3.47% 3.19% 2.74%
2.94% 2.73% 2.39% and now +2.60% are the yearly GDP-deflators
1.17% 1.78% 0.25% 1.57% –0.11% 0.52% –0.12% 0.31% –0.35% 0.39%
0.68% 0.54% 0.59% 0.05% 0.30% 0.86% 1.82% 0.66% 0.73% 0.86%
0.15% 0.94% 1.20% and now +0.16% is the quarterly real GDP
4.43% 4.70% 4.08% 4.85% 3.52% 2.24% 1.86% 0.59% 0.35% 0.23%
1.03% 1.27% 2.22% 1.87% 1.49% 1.81% 3.05% 3.68% 4.12% 4.13%
3.17% 3.15% 3.18% 3.01% 3.22% 2.88% 3.31% 3.22% 2.37% 2.60%
1.55% 1.89% 2.84% and now +2.47% are the yearly real GDP-rates
1.52% 2.21% 1.15% 2.01% 0.40% 0.93% 0.68% 1.07% 0.06% 0.90%
1.05% 0.90% 0.97% 0.61% 1.08% 1.18% 2.35% 1.20% 1.66% 1.80%
1.46% 1.44% 1.72% 1.34% 1.98% 1.17% 2.04% 1.47% 0.85% 1.17%
1.19% 1.60% 1.46% and now +0.79% is the quarterly nominal GDP
5.96% 6.32% 6.21% 7.07% 5.89% 4.56% 4.07% 3.12% 2.77% 2.74%
3.11% 2.94% 3.87% 3.57% 3.60% 3.89% 5.31% 5.93% 6.54% 7.19%
6.25% 6.50% 6.56% 6.09% 6.62% 6.34% 6.87% 6.80% 5.64% 5.41%
4.53% 4.67% 5.30% and now +5.14% is the yearly nominal GDP
From the High Levels of 2006 and Early 2007
but Decelerating Inflation Pops up the Real Rates
The bad news is that growth nominally declines further in QIII from the high value of the first quarter. But due to a basis effect the yearly nominal rate expands again, even from a up revised rate for QII. This means that the exploding food and energy prices still have only a little effect on the german economy.
The good news is that inflation as measured by the GDP deflator declines from stellar 0.92 % in the first quarter, over uprevised 0.78 % to 0.24 % in the third quarter. So the inflation hump of the first quarter is overcome, even if the yearly GDP deflator 2.17 % still is too high, although only a little.
Therefore the real growth rate 0.68 % after only 0.26 % in the second quarter is something, which can be appreciated. Also 2.55 % yearly rate in the third quarter after 2.55 % in the second is high for Germany, which grew annualised in the two summer quarters by 1.88 % - which neither is weak nor strong.
Conclusion: The attack onto economic growth of the second quarter is fought off, although the summer 2007 didn't suffice to conclude a return to economic expansion as that one of the year 2006. Certainly this positive result originates in the worldwide economic boom, especially that in the BRIC economies and in the USA. The effects of exploding food and energy prices so far is compensated for by the declining Dollar or the strength of the Euro. Inflation worries fade, there is no need for the ECB to resume tightening. German growth of the third quarter 2007 back toQIII 99 ( including up revisions of QII 07 deflator and nominal GDP )
–0.26% –0.19% –0.29% –0.31% 0.12% –0.12% 0.71% 0.38% 0.13%
1.04% 0.18% –0.17% 0.52% 0.65% 0.04% 0.26% 0.42% 0.09% 0.38%
0.46% 0.11% –0.06% 0.35% –0.14% –0.17% 0.22% –0.08% 0.31% 0.15%
0.21% 0.92% 0.78% and now + 0.24 % are the quarterly GDP-defla-
tors.
0.23% –0.14% –0.47% –1.04% –0.66% –0.60% 0.40% 1.09% 1.10%
2.27% 1.73% 1.18% 1.57% 1.18% 1.04% 1.48% 1.38% 0.82% 1.17%
1.37% 1.05% 0.89% 0.86% 0.54% 0.60% 0.89% 0.46% 0.63% 0.61%
0.60% 1.60% 2.08% and now + 2.17 % are the yearly GDP-deflators.
1.23% 1.26% 1.03% 1.16% –0.07% 0.17% 0.99% 0.05% –0.20% 0.24%
–0.31% 0.11% 0.37% –0.21% –0.39% –0.27% 0.43% 0.38% 0.26%
–0.08% –0.17% 0.08% 0.35% 0.40% 0.57% 0.28% 0.85% 1.31% 0.74%
0.99% 0.54% 0.26% and now + 0.68 % are the quarterly real GDP-
rates.
2.13% 3.49% 3.45% 4.76% 3.41% 2.30% 2.26% 1.14% 1.01% 1.08%
–0.22% –0.16% 0.41% 0.03% –0.02% –0.49% –0.44% 0.14% 0.80%
0.99% 0.39% 0.10% 0.19% 0.67% 1.41% 1.61% 2.11% 3.04% 3.22%
3.95% 3.63% 2.55% and now + 2.49 % are the yearly real GDP
rates.
0.97% 1.07% 0.73% 0.85% 0.05% 0.05% 1.70% 0.43% –0.07% 1.28%
–0.13% –0.06% 0.90% 0.44% –0.36% 0.00% 0.85% 0.47% 0.65%
0.38% –0.06% 0.02% 0.70% 0.54% 0.74% 0.50% 0.77% 1.63% 0.89%
1.20% 1.46% 1.04% and now + 0.93 % are the quarterly nominal
GDP rates.
2.36% 3.34% 2.97% 3.67% 2.73% 1.69% 2.67% 2.24% 2.12% 3.38%
1.51% 1.02% 2.00% 3.38% 0.92% 0.98% 0.93% 1.15% 1.89% 2.37%
1.44% 0.89% 1.04% 1.21% 2.02% 2.52% 2.58% 3.69% 3.85% 4.57%
5.29% 4.68% and now + 4.71 % are the yearly nominal GDP rates.
A very good news is, that the quarterly deflator of QII 2007 is down to 0.19 from 0.65 % - which is nothing, perhaps a little too low already. So the inflation hickup of the first quarter only was shortlived. The yearly deflator declines from 2.73 to 2.32 %, which is the right direction and close to the comfort level at 2 %. The FED can loosen its grip, as will probably be done today, without threat to the inflation picture.
Another very good news is, that the quarterly real growth rises to 0.96 %, from a little down revised 0.94 % for the second quarter. This is the opposite than recession, but there are too many naysayers to take notice of that. The full year of subdued growth is overcome now, the yearly real growth rate advances to 2.59 %, from only 1.89 % still in the second quarter. Note that the two summer quarters ran at a close to 4 % growth expansion. A pace like this hasn't be seen in continental Europe - Germany, France, Netherlands, Italy - since decades.
Nominally the US-economy expanded in the fourth consecutive quarter above 1 % in the quarter, 1.15 % in the third quarter after 1.60 being nominally a decline, compensated for by the declining deflator. The yearly nominal growth rate advances from 4.67 % in the second quarter to 4.97 % in the third, boding well for governments tax receipts, number of jobs and especially for corporate earnings.
Summary: If America expands at another such pace in the running quarter, the subdued year 2006 will be history.Certainly this expansion is due to the falling dollar, which makes exports rise and imports fall. But the main contribution comes from buyont sectors in hightech, internet, defense, energy and food, all what you see below you, flying from the Appalachians to the Rocky Mountains. This overcompensates the decline in housing, financials and the automotive sector - obviously by far. To get a proof, read the quarterly earnings reports.
The first complete count of US GDP rates and deflators for QIII 2007 ( including no revisions of earlier quarters ):
0.35% 0.43% 0.41% 0.52% 0.43% 0.90% 0.81% 0.76% 0.41% 0.50%
0.37% 0.36% 0.38% 0.55% 0.78% 0.32% 0.52% 0.54% 0.92% 0.93%
0.56% 0.80% 0.95% 0.64% 0.85% 0.87% 0.85% 0.86% 0.58% 0.42%
1.04% 0.65% and now +0.19% are the quarterly GDP-deflators
since QII 99
1.46% 1.55% 2.04% 2.12% 2.29% 2.27% 2.18% 2.51% 2.41% 2.51%
2.06% 1.65% 1.61% 1.66% 2.08% 2.04% 2.19% 2.18% 2.32% 2.94%
2.98% 3.25% 3.28% 2.99% 3.29% 3.36% 3.25% 3.47% 3.19% 2.74%
2.94% 2.73% and now +2.32% are the yearly GDP-deflators since
1.17% 1.78% 0.25% 1.57% –0.11% 0.52% –0.12% 0.31% –0.35% 0.39%
0.68% 0.54% 0.59% 0.05% 0.30% 0.86% 1.82% 0.66% 0.73% 0.86%
0.15% 0.94% and now +0.96% are the quarterly real GDP-rates
4.43% 4.70% 4.08% 4.85% 3.52% 2.24% 1.86% 0.59% 0.35% 0.23%
1.03% 1.27% 2.22% 1.87% 1.49% 1.81% 3.05% 3.68% 4.12% 4.13%
3.17% 3.15% 3.18% 3.01% 3.22% 2.88% 3.31% 3.22% 2.37% 2.60%
1.55% 1.89% and now +2.59% are the yearly real GDP-rates
1.52% 2.21% 1.15% 2.01% 0.40% 0.93% 0.68% 1.07% 0.06% 0.90%
1.05% 0.90% 0.97% 0.61% 1.08% 1.18% 2.35% 1.20% 1.66% 1.80%
1.46% 1.44% 1.72% 1.34% 1.98% 1.17% 2.04% 1.47% 0.85% 1.17%
1.19% 1.60% and now +1.15% are the quarterly nominal GDP-rates
5.96% 6.32% 6.21% 7.07% 5.89% 4.56% 4.07% 3.12% 2.77% 2.74%
3.11% 2.94% 3.87% 3.57% 3.60% 3.89% 5.31% 5.93% 6.54% 7.19%
6.25% 6.50% 6.56% 6.09% 6.62% 6.34% 6.87% 6.80% 5.64% 5.41%
4.53% 4.67% and now +4.97% are the yearly nominal GDP-rates
A very good news is, that the quarterly deflator of QII 2007 is down to 0.19 from 0.65 % - which is nothing, perhaps a little too low already. So the inflation hickup of the first quarter only was shortlived. The yearly deflator declines from 2.73 to 2.32 %, which is the right direction and close to the comfort level at 2 %. The FED can loosen its grip, as will probably be done today, without threat to the inflation picture.
Another very good news is, that the quarterly real growth rises to 0.96 %, from a little down revised 0.94 % for the second quarter. This is the opposite than recession, but there are too many naysayers to take notice of that. The full year of subdued growth is overcome now, the yearly real growth rate advances to 2.59 %, from only 1.89 % still in the second quarter. Note that the two summer quarters ran at a close to 4 % growth expansion. A pace like this hasn't be seen in continental Europe - Germany, France, Netherlands, Italy - since decades.
Nominally the US-economy expanded in the fourth consecutive quarter above 1 % in the quarter, 1.15 % in the third quarter after 1.60 being nominally a decline, compensated for by the declining deflator. The yearly nominal growth rate advances from 4.67 % in the second quarter to 4.97 % in the third, boding well for governments tax receipts, number of jobs and especially for corporate earnings.
Summary: If America expands at another such pace in the running quarter, the subdued year 2006 will be history.Certainly this expansion is due to the falling dollar, which makes exports rise and imports fall. But the main contribution comes from buyont sectors in hightech, internet, defense, energy and food, all what you see below you, flying from the Appalachians to the Rocky Mountains. This overcompensates the decline in housing, financials and the automotive sector - obviously by far. To get a proof, read the quarterly earnings reports.
The first shot at the US GDP rates and deflators forQIII 2007 ( including tiny down revisions of the second quarter ):
0.35% 0.43% 0.41% 0.52% 0.43% 0.90% 0.81% 0.76% 0.41% 0.50%
0.37% 0.36% 0.38% 0.55% 0.78% 0.32% 0.52% 0.54% 0.92% 0.93%
0.56% 0.80% 0.95% 0.64% 0.85% 0.87% 0.85% 0.86% 0.58% 0.42%
1.04% 0.65% and now +0.19% are the quarterly GDP-deflators
since QII 99
1.46% 1.55% 2.04% 2.12% 2.29% 2.27% 2.18% 2.51% 2.41% 2.51%
2.06% 1.65% 1.61% 1.66% 2.08% 2.04% 2.19% 2.18% 2.32% 2.94%
2.98% 3.25% 3.28% 2.99% 3.29% 3.36% 3.25% 3.47% 3.19% 2.74%
2.94% 2.73% and now +2.32% are the yearly GDP-deflators since
1.17% 1.78% 0.25% 1.57% –0.11% 0.52% –0.12% 0.31% –0.35% 0.39%
0.68% 0.54% 0.59% 0.05% 0.30% 0.86% 1.82% 0.66% 0.73% 0.86%
0.15% 0.94% and now +0.96% are the quarterly real GDP-rates
4.43% 4.70% 4.08% 4.85% 3.52% 2.24% 1.86% 0.59% 0.35% 0.23%
1.03% 1.27% 2.22% 1.87% 1.49% 1.81% 3.05% 3.68% 4.12% 4.13%
3.17% 3.15% 3.18% 3.01% 3.22% 2.88% 3.31% 3.22% 2.37% 2.60%
1.55% 1.89% and now +2.59% are the yearly real GDP-rates
1.52% 2.21% 1.15% 2.01% 0.40% 0.93% 0.68% 1.07% 0.06% 0.90%
1.05% 0.90% 0.97% 0.61% 1.08% 1.18% 2.35% 1.20% 1.66% 1.80%
1.46% 1.44% 1.72% 1.34% 1.98% 1.17% 2.04% 1.47% 0.85% 1.17%
1.19% 1.60% and now +1.15% are the quarterly nominal GDP-rates
5.96% 6.32% 6.21% 7.07% 5.89% 4.56% 4.07% 3.12% 2.77% 2.74%
3.11% 2.94% 3.87% 3.57% 3.60% 3.89% 5.31% 5.93% 6.54% 7.19%
6.25% 6.50% 6.56% 6.09% 6.62% 6.34% 6.87% 6.80% 5.64% 5.41%
4.53% 4.67% and now +4.97% are the yearly nominal GDP-rates
A very good news is, that the quarterly deflator of QII 2007 is down to 0.66 % (but that one of QI is up to untolerable 1.04 %). So the inflation hickup of the first quarter only was temporary. The yearly deflator declines from 2.94 to 2.74 %, which is the right direction and takes off some pressure onto the FED to tighten.
Another good news is, that the quarterly real growth rises to 0.97 %, from too low a 0.15 % of the first quarter. This is nice, but not yet extreme. Because of a full year of subdued growth, the yearly rate increases to 1.92 % only, from 1.55 in the first quarter, which still is a little low in american eyes.
Nominally the US-economy expanded in the second consecutive quarter by 1.64 %, from only 0.85 in the third quarter 2006, over 0.95 and 1.19 %. This is the right direction, but in american eyes still not high.
On a yearly basis this results nominally is only 4.71 %, still down from the 5.41 % at the end of 2006 and only marginally above the 4.53 % of QI.
Summary: The results for the second quarter 07 are much higher than those of the preceding four quarters and higher than in the first estimate one month ago, ending the slump of growth. The american economy again expands at a nice pace. The nominal quarterly rate of 1.64 % is considerably higher, but since there were four subdued quarters before, the yearly rate improves only a little to 4.71 %. The quarterly deflator for QII is 0.66 % which is considerably better the average since 2005, but still a little too high.A final tightening step of the Fed is unnecessary, loosening a quarter point would do no harm.
After four weak quarters, the economy expands again at a high pace, contrary to Germany, where after four strong quarters the economy stagnates again.
The first complete count of the US GDP rates anddeflators for QII 2007 ( no revisions of earlier rates ):
0.35% 0.43% 0.41% 0.52% 0.43% 0.90% 0.81% 0.76% 0.41% 0.50%
0.37% 0.36% 0.38% 0.55% 0.78% 0.32% 0.52% 0.54% 0.92% 0.93%
0.56% 0.80% 0.95% 0.64% 0.85% 0.85% 0.85% 0.86% 0.58% 0.42%
1.04% and now +0.66% are the quarterly GDP-deflators since QII 99
1.46% 1.55% 2.04% 2.12% 2.29% 2.27% 2.18% 2.51% 2.41% 2.51%
2.06% 1.65% 1.61% 1.66% 2.08% 2.04% 2.19% 2.18% 2.32% 2.94%
2.98% 3.25% 3.28% 2.99% 3.29% 3.36% 3.25% 3.47% 3.19% 2.74%
2.94% and now +2.74% are the yearly GDP-deflators since QII 99
1.17% 1.78% 0.25% 1.57% –0.11% 0.52% –0.12% 0.31% –0.35% 0.39%
0.68% 0.54% 0.59% 0.05% 0.30% 0.86% 1.82% 0.66% 0.73% 0.86%
0.15% and now +0.97% are the quarterly real GDP-growth rates
4.43% 4.70% 4.08% 4.85% 3.52% 2.24% 1.86% 0.59% 0.35% 0.23%
1.03% 1.27% 2.22% 1.87% 1.49% 1.81% 3.05% 3.68% 4.12% 4.13%
3.17% 3.15% 3.18% 3.01% 3.22% 2.88% 3.31% 3.22% 2.37% 2.60%
1.55% and now +1.92% are the yearly real GDP-growth rates
1.52% 2.21% 1.15% 2.01% 0.40% 0.93% 0.68% 1.07% 0.06% 0.90%
1.05% 0.90% 0.97% 0.61% 1.08% 1.18% 2.35% 1.20% 1.66% 1.80%
1.46% 1.44% 1.72% 1.34% 1.96% 1.17% 2.04% 1.47% 0.85% 0.95%
1.19% and now +1.64% are the quarterly nominal GDP-growth rates
5.96% 6.32% 6.21% 7.07% 5.89% 4.56% 4.07% 3.12% 2.77% 2.74%
3.11% 2.94% 3.87% 3.57% 3.60% 3.89% 5.31% 5.93% 6.54% 7.19%
6.25% 6.50% 6.56% 6.09% 6.62% 6.34% 6.87% 6.80% 5.64% 5.41%
4.53% and now +4.71% are the yearly nominal GDP-growth rates
High Levels of The Preceeding Four
Quarters - Inflation Decelerates Too
The very good news is the deceleration of inflation to an ideal rate of 0.41 %, 1.70 % on a yearly basis being the best of all economic worlds as well.
But the fall of the nominal quarterly rate to only 0.67 %, after 1.20 % and 1.46 % is not so good news - after four higher quarters back to stagnation? On a yearly basis nominal 4.30 % is much lower than the 5.29 yearly rate at the end of the first quarter - still excellent, but originates completely from the last three quarters of 2006.
Adding this together to the real 0.26 % real quarterly growth in the second quarter is a far too low rate, after 0.99 % and 0.54 % in the two quarters before. So 2007 is a disappointment. 2.55 % yearly real growth still sounds well, but this too comes only from the four excellent quarters since the second quarter 2006.
We don't see any longer the necessity for the ECB to tighten further.
Conclusion: The galactical deflator of the first quarter made a revision of the seasonal adjustment necessary. 0.92 % deflator for the first quarter comes in at an american level, only 0.41 % for the second is a strong result, actually the best possible rate. But the new adjustment reveals, that Germany has been considerably deeper in recession in the years after 2002 - and that this recession has been foreshadowed by a period of five quarters with deflation in 99 and 2000. The low growth rates for the second quarter 07 start the fear that Germany might be on the way back down there, the high growth rate of the four quarters since QII last year being due to one-time effects only. German growth of the second quarter 2007back to QIII 99 ( including revisions back to 2001 )
–0.26% –0.19% –0.29% –0.31% 0.12% –0.12% 0.71% 0.38% 0.13%
1.04% 0.18% –0.17% 0.52% 0.65% 0.04% 0.26% 0.42% 0.09% 0.38%
0.46% 0.11% –0.06% 0.35% –0.14% –0.17% 0.22% –0.08% 0.31% 0.15%
0.21% 0.92% and now + 0.41 % are the quarterly GDP-deflators.
0.23% –0.14% –0.47% –1.04% –0.66% –0.60% 0.40% 1.09% 1.10%
2.27% 1.73% 1.18% 1.57% 1.18% 1.04% 1.48% 1.38% 0.82% 1.17%
1.37% 1.05% 0.89% 0.86% 0.54% 0.60% 0.89% 0.46% 0.63% 0.61%
0.60% 1.60% and now + 1.70 % are the yearly GDP-deflators.
1.23% 1.26% 1.03% 1.16% –0.07% 0.17% 0.99% 0.05% –0.20% 0.24%
–0.31% 0.11% 0.37% –0.21% –0.39% –0.27% 0.43% 0.38% 0.26%
–0.08% –0.17% 0.08% 0.35% 0.40% 0.57% 0.28% 0.85% 1.31% 0.74%
0.99% 0.54% and now + 0.26 % are the quarterly real GDP rates.
2.13% 3.49% 3.45% 4.76% 3.41% 2.30% 2.26% 1.14% 1.01% 1.08%
–0.22% –0.16% 0.41% 0.03% –0.02% –0.49% –0.44% 0.14% 0.80%
0.99% 0.39% 0.10% 0.19% 0.67% 1.41% 1.61% 2.11% 3.04% 3.22%
3.96% 3.63% and now + 2.55 % are the yearly real GDP rates.
0.97% 1.07% 0.73% 0.85% 0.05% 0.05% 1.70% 0.43% –0.07% 1.28%
–0.13% –0.06% 0.90% 0.44% –0.36% 0.00% 0.85% 0.47% 0.65%
0.38% –0.06% 0.02% 0.70% 0.54% 0.74% 0.50% 0.77% 1.63% 0.89%
1.20% 1.46% and now + 0.67 % are the quarterly nominal GDP rates.
2.36% 3.34% 2.97% 3.67% 2.73% 1.69% 2.67% 2.24% 2.12% 3.38%
1.51% 1.02% 2.00% 3.38% 0.92% 0.98% 0.93% 1.15% 1.89% 2.37%
1.44% 0.89% 1.04% 1.21% 2.02% 2.52% 2.58% 3.69% 3.85% 4.57%
5.29% and now + 4.30 % are the yearly nominal GDP rates.
A very good news is, that the quarterly deflator of QII 2007 is down to 0.66 % (but that one of QI is up to untolerable 1.04 %). So the inflation hickup of the first quarter only was temporary. The yearly deflator declines from 2.94 to 2.74 %, which is the right direction and takes off some pressure onto the FED to tighten.
Another good news is, that the quarterly real growth rises to 0.84 %, from too low 0.15 % of the first quarter. This is nice, but not yet extreme. Because of a full year of subdued growth, the yearly rate increases to 1.78 %, from 1.55 in the first quarter, which still is a little low in american eyes.
Nominally the US-economy expanded in the second consecutive quarter to 1.51 %, from only 0.85 in the third quarter 2006, over 0.95 and 1.19 %. This is the right direction, but in american eyes still not high.
On a yearly basis this results nominally is only 4.57 %, still down from the 5.41 % at the end of 2006 and only marginally above the 4.54 % of QI.
Summary: The results for the second quarter 07 are much higher than those of the preceding four quarters, i.e. the slump in american growth is terminated, the american economy again expands at a nice pace. The nominal quarterly rate of 1.51 % is considerably higher, but since there were four subdued quarters before, the yearly rate improves only a little to 4.57 %. The quarterly deflator for QII is 0.66 % which is considerably better the average since 2005, but still a little too high. A final tightening step of the FED is possible, but not necessarily necessary.The revisions of earlier rates since 2003 are no consideration: The nominal rates are only marginally revised downwards. Because deflators are revised up, the real rates are lower than seen so far.
The first shot at the US GDP rates and deflators forQII 2007 ( major revisions of earlier rates since 2003 ):
0.35% 0.43% 0.41% 0.52% 0.43% 0.90% 0.81% 0.76% 0.41% 0.50%
0.37% 0.36% 0.38% 0.55% 0.78% 0.32% 0.52% 0.54% 0.92% 0.93%
0.56% 0.80% 0.95% 0.64% 0.85% 0.87% 0.85% 0.86% 0.58% 0.42%
1.04% and now +0.66% are the quarterly GDP-deflators since QII 99
1.46% 1.55% 2.04% 2.12% 2.29% 2.27% 2.18% 2.51% 2.41% 2.51%
2.06% 1.65% 1.61% 1.66% 2.08% 2.04% 2.19% 2.18% 2.32% 2.94%
2.98% 3.25% 3.28% 2.99% 3.29% 3.36% 3.25% 3.47% 3.19% 2.74%
2.94% and now +2.74% are the yearly GDP-deflators since QII 99
1.17% 1.78% 0.25% 1.57% –0.11% 0.52% –0.12% 0.31% –0.35% 0.39%
0.68% 0.54% 0.59% 0.05% 0.30% 0.86% 1.82% 0.66% 0.73% 0.86%
0.15% and now +0.84% are the quarterly real GDP-growth rates
4.43% 4.70% 4.08% 4.85% 3.52% 2.24% 1.86% 0.59% 0.35% 0.23%
1.03% 1.27% 2.22% 1.87% 1.49% 1.81% 3.05% 3.68% 4.12% 4.13%
3.17% 3.15% 3.18% 3.01% 3.22% 2.88% 3.31% 3.22% 2.37% 2.60%
1.55% and now +1.78% are the yearly real GDP-growth rates
1.52% 2.21% 1.15% 2.01% 0.40% 0.93% 0.68% 1.07% 0.06% 0.90%
1.05% 0.90% 0.97% 0.61% 1.08% 1.18% 2.35% 1.20% 1.66% 1.80%
1.46% 1.44% 1.72% 1.34% 1.96% 1.17% 2.04% 1.47% 0.85% 0.95%
1.19% and now +1.51% are the quarterly nominal GDP-growth rates
5.96% 6.32% 6.21% 7.07% 5.89% 4.56% 4.07% 3.12% 2.77% 2.74%
3.11% 2.94% 3.87% 3.57% 3.60% 3.89% 5.31% 5.93% 6.54% 7.19%
6.25% 6.50% 6.56% 6.09% 6.62% 6.34% 6.87% 6.80% 5.64% 5.41%
4.53% and now +4.57% are the yearly nominal GDP-growth rates
A very bad news is, that the quarterly deflator of QI 2007 explodes to intolerable 0.99 % - paying deerly for two quarters with low inflation. And the yearly deflator climbs from 2.51 to 2.70 %, reversing the direction of the second half of 2006. The FED has to tighten it's grip on the money supply.
Another bad news is, that the quarterly real growth falls from 0.61 to low 0.16 %, which in american eyes is a black zero.
The yearly real rate drops from 3.13 to 1.90 %, which, however, is a drastic basis effect because of stellar growth in the first quarter of last year.
Nominally the US-economy expanded in the first quarter 2007 at a 1.15 % pace, after only 1.02 in QIV and even 0.95 in QIII. This still is the good news, even if it is considerably less than in the first estimate of end of April.
On a yearly basis this results nominally in only 4.65 %, considerably down from the 5.72 % at the end of 2006 and less than in the first estimate of end of April.
Summary: The results for the first quarter 07 are bad. A nice nominal growth is completely cancelled to virtually no real growth by intolerable high inflation - 0.99 % in quarterly terms is the highest inflation rate in this millenium. The still high nominal rate bodes well for the job situation, for corporate earnings and tax income of the government. But the too low real quarterly and yearly rates considerably darken the outlook for the rest of this year. Because of the high growth in the first quarter 2006, there is a drastic basis effect, which drags yearly growth rates down, in real and in nominal terms. Because of low inflation in the second half of 2006 there yet isn't such a basis effect in the yearly deflator. The complete count of US GDP rates and defla-tors for QI 2007 ( no revisions of earlier rates ):
0.35% 0.43% 0.41% 0.52% 0.43% 0.90% 0.81% 0.76% 0.41% 0.50%
0.37% 0.36% 0.38% 0.55% 0.78% 0.32% 0.52% 0.54% 0.93% 0.90%
0.52% 0.80% 0.85% 0.61% 0.80% 0.81% 0.80% 0.81% 0.46% 0.41%
and now +0.99% are the quarterly GDP-deflators since QII 99.
1.46% 1.55% 2.04% 2.12% 2.29% 2.27% 2.18% 2.51% 2.41% 2.51%
2.06% 1.65% 1.61% 1.66% 2.08% 2.04% 2.19% 2.18% 2.33% 2.92%
2.92% 3.18% 3.10% 2.80% 3.09% 3.10% 3.06% 3.27% 2.92% 2.51%
and now +2.70% are the yearly GDP-deflators since QII 99.
1.17% 1.78% 0.25% 1.57% –0.11% 0.52% –0.12% 0.31% –0.35% 0.39%
0.68% 0.54% 0.59% 0.05% 0.30% 0.86% 1.82% 0.66% 0.95% 1.00%
and now +0.16% are the quarterly real GDP-growth rates since.
4.43% 4.70% 4.08% 4.85% 3.52% 2.24% 1.86% 0.59% 0.35% 0.23%
1.03% 1.27% 2.22% 1.87% 1.49% 1.81% 3.05% 3.68% 4.35% 4.49%
3.41% 3.40% 3.29% 3.10% 3.36% 3.15% 3.69% 3.51% 2.95% 3.13%
and now +1.90% are the yearly real GDP-growth rates since QII 99.
1.52% 2.21% 1.15% 2.01% 0.40% 0.93% 0.68% 1.07% 0.06% 0.90%
1.05% 0.90% 0.97% 0.61% 1.08% 1.18% 2.35% 1.20% 1.88% 1.91%
1.29% 1.45% 1.70% 1.42% 1.84% 1.25% 2.18% 1.45% 0.95% 1.02%
and now +1.15% are the quarterly nominal GDP-growth rates since.
5.96% 6.32% 6.21% 7.07% 5.89% 4.56% 4.07% 3.12% 2.77% 2.74%
3.11% 2.94% 3.87% 3.57% 3.60% 3.89% 5.31% 5.93% 6.77% 7.55%
6.43% 6.69% 6.49% 5.98% 6.56% 6.35% 6.86% 6.89% 5.96% 5.72%
and now +4.65% are the yearly nominal GDP-growth rates since.
to the Hightest Rate in Ten Years
But Whopping Inflation Cancels Growth to only Moderately Real Terms
The very good news is the acceleration of nominal growth from 1.04 to 2.41 % in the first quarter, on a yearly basis from 4,19 to 5.94 %.
But the surge in inflation, the GDP-deflator from too low a rate of 0.06 to whopping 1.89 % is a severe set back. The yearly deflator rises from 0.24 to 2.26 %.
Therefore the real growth rates declines from 0.99 to only 0.51 % only, same effect as in the US in the first quarter. The real yearly growth rates declines from 3.94 to 3.60 %. Both declines are less than anticipated.
Conclusion: Shy of 6 % yearly nominal growth is excellent a rate for Germany, boding well for the government's tax revenue, for corporate earnings and the job situation. But the explosion of the GDP-inflation is bad news and cancels the surge in real terms to a decline. The ill-timed value added tax hike from 16 to 19 % so far left no trace in the growth rates - but made inflation explode. German growth rates of the first quarter 2007( including drastic up revisions for the four quarters 2006 )
since QIII 1999
–0.29% –0.24% –0.19% –0.32% 0.07% –0.12% 0.76% 0.39% 0.12%
0.87% 0.36% –0.14% 0.44% 0.50% 0.04% 0.33% 0.39% 0.00% 0.26%
0.37% 0.04% 0.08% 0.36% –0.05% –0.15% 0.19% –0.13% 0.04% 0.27%
0.06% but now + 1.89 % are the quarterly GDP-deflators.
0.23% –0.18% –0.44% –1.03% –0.68% –0.56% 0.40% 1.11% 1.16%
2.16% 1.76% 1.22% 1.54% 1.17% 0.84% 1.32% 1.27% 0.76% 0.98%
1.02% 0.67% 0.75% 0.86% 0.44% 0.54% 0.65% 0.16% 0.25% 0.37%
0.24% but now + 2.26 % are the yearly GDP-deflators.
1.26% 1.31% 0.93% 1.17% –0.02% 0.17% 0.93% 0.04% –0.16% 0.27%
–0.38% 0.10% 0.43% –0.11% –0.42% –0.35% 0.39% 0.57% 0.38%
–0.11% –0.15% 0.03% 0.65% 0.26% 0.51% 0.27% 0.84% 1.23% 0.82%
0.99% and now + 0.51 % are the quarterly real GDP rates.
2.12% 3.52% 3.42% 4.75% 3.43% 2.26% 2.27% 1.12% 0.98% 1.08%
–0.24% –0.17% 0.41% 0.03% –0.01% –0.46% –0.50% 0.18% 0.99%
1.24% 0.70% 0.15% 0.42% 0.79% 1.46% 1.71% 1.90% 2.89% 3.21%
3.94% and now + 3.60 % are the yearly real GDP rates.
0.97% 1.07% 0.73% 0.85% 0.05% 0.05% 1.70% 0.43% –0.03% 1.14%
–0.02% –0.04% 0.87% 0.39% –0.39% –0.02% 0.78% 0.57% 0.64%
0.26% –0.11% 0.11% 1.01% 0.22% 0.66% 0.46% 0.71% 1.28% 1.09%
1.04% and now + 2.41 % are the quarterly nominal GDP rates.
2.36% 3.34% 2.97% 3.67% 2.73% 1.69% 2.67% 2.24% 2.16% 3.27%
1.52% 1.05% 1.96% 1.20% 0.83% 0.85% 0.76% 0.94% 1.98% 2.27%
1.37% 0.90% 1.28% 1.23% 2.01% 2.37% 2.06% 3.15% 3.59% 4.19%
and now + 5.94 % are the yearly nominal GDP rates.
A very bad news is, that the quarterly deflator of QI 2007 explodes to intolerable 0.98 % - after two quarters with low inflation. And the yearly deflator climbs from 2.51 to 2.69 %, reversing the direction of the second half of 2006. The FED has no chance to loosen it's grip.
Another bad news is, that the quarterly real growth falls from 0.61 to low 0.31 %.
The yearly real rate drops from 3.13 to 2.06 %, which, however, is a drastic basis effect because of stellar growth in the first quarter of last year.
Nominally the US-economy expanded in the first quarter 2007 at a 1.30 % pace, after 1.02 in QIV and only 0.95 in QIII.
On a yearly basis this results nominally in only 4.80 %, considerably down from the 5.72 % at the end of 2006.
Summary: The results for the first quarter are mixed. A nice nominal growth is completely cancelled to low real growth by intolerable high inflation, which in quarterly terms is the highest in this millenium. The high nominal rate bodes well for the job situation, for corporate earnings and tax income of the government. But the too low real quarterly and yearly rates considerably darken the outlook for the rest of this year. Because of the high growth in the first quarter 2006, there is a drastic basis effect, which drags yearly growth rates down, in real and in nominal terms. Because of low inflation in the second half of 2006 there yet isn't such a basis effect in the yearly deflator. The first shot at the US GDP rates and deflators forQI 2007 ( no revisions of earlier rates ):
0.35% 0.43% 0.41% 0.52% 0.43% 0.90% 0.81% 0.76% 0.41% 0.50%
0.37% 0.36% 0.38% 0.55% 0.78% 0.32% 0.52% 0.54% 0.93% 0.90%
0.52% 0.80% 0.85% 0.61% 0.80% 0.81% 0.80% 0.81% 0.46% 0.41%
and now +0.98% are the quarterly GDP-deflators since QII 99.
1.46% 1.55% 2.04% 2.12% 2.29% 2.27% 2.18% 2.51% 2.41% 2.51%
2.06% 1.65% 1.61% 1.66% 2.08% 2.04% 2.19% 2.18% 2.33% 2.92%
2.92% 3.18% 3.10% 2.80% 3.09% 3.10% 3.06% 3.27% 2.92% 2.51%
and now +2.69% are the yearly GDP-deflators since QII 99.
1.17% 1.78% 0.25% 1.57% –0.11% 0.52% –0.12% 0.31% –0.35% 0.39%
0.68% 0.54% 0.59% 0.05% 0.30% 0.86% 1.82% 0.66% 0.95% 1.00%
and now +0.31% are the quarterly real GDP-growth rates since.
4.43% 4.70% 4.08% 4.85% 3.52% 2.24% 1.86% 0.59% 0.35% 0.23%
1.03% 1.27% 2.22% 1.87% 1.49% 1.81% 3.05% 3.68% 4.35% 4.49%
3.41% 3.40% 3.29% 3.10% 3.36% 3.15% 3.69% 3.51% 2.95% 3.13%
and now +2.06% are the yearly real GDP-growth rates since QII 99.
1.52% 2.21% 1.15% 2.01% 0.40% 0.93% 0.68% 1.07% 0.06% 0.90%
1.05% 0.90% 0.97% 0.61% 1.08% 1.18% 2.35% 1.20% 1.88% 1.91%
1.29% 1.45% 1.70% 1.42% 1.84% 1.25% 2.18% 1.45% 0.95% 1.02%
and now +1.30% are the quarterly nominal GDP-growth rates since.
5.96% 6.32% 6.21% 7.07% 5.89% 4.56% 4.07% 3.12% 2.77% 2.74%
3.11% 2.94% 3.87% 3.57% 3.60% 3.89% 5.31% 5.93% 6.77% 7.55%
6.43% 6.69% 6.49% 5.98% 6.56% 6.35% 6.86% 6.89% 5.96% 5.72%
and now +4.80% are the yearly nominal GDP-growth rates since.
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