Does it matter if we have a good GDP and no jobs?
That’s a question that will have to be considered today as the powers that be try to make a big deal of the fact that we are getting worse more slowly, even as the Q2 GDP report is expected to be 60% WORSE (-1.6%) than last quarter (-1%). It’s very possible we get a small beat today (it will be tragic if we don’t) as crude oil prices jumped 25% in May and June (forcing Americans to spend money – yay GDP!) and exports nearly doubled, non-defense capital goods gained about 5% and, of course, the stock market jumped 15%. In the3 months of Q2 we lost 1.3M jobs and the average workweek for those lucky enough to still be working dropped by 4% AND their pay dropped 1.5%but hey, who cares, AIG’s stock is up!
My daughter has it all figured out, she lost a tooth last night and got a visit from the tooth fairy and at breakfast she was speculating that the little pixie is probably using all those teeth to build houses for homeless people. I didn’t have the heart to tell here that, at $5 per tooth, it was probably cheaper to stick with lumber but she may be on to something as TOL blew through $472M in their last quater, losing $2.93 a share on the sale of just 792 homes in the entire United States of America (about 5 homes per month per state). That’s almost 100 Million teeth! Maybe my daughter is onto something with this tooth house idea as clearly the wooden ones can’t be sold profitably…
TOL isn’t the only one running on empty last quarter. We all know that the GDP is currently beingboosted by the largest government stimulus package in history.Government spending this year is trending to 30% of GDP, that compares to 12% at the height of Roosevelt’s New Deal. Of course we don’t actuallyHAVE 30% of the GDP – we were running a huge deficit before the government had to jump in to “help” and we are now borrowingalmost 40% of our spending and really we’re borrowing 62.5% of what we spend because WE’RE NOT SUPPOSED to be using Social Security and Medicare money to pay for current programs.
That of course, went out the window when we gave George Bush II the keys to Al Gore’s lock box but no…
