After the blip

After the blip

As anticipated, the fourth quarter growth of the US economy has prompted fresh optimism about the strength of the US recovery.

For some breakdown, here's John Mauldin:

First, over 60% (3.7%) of the growth came from inventory rebuilding, as opposed to just 0.7% in the third quarter.

(The "inventory bounce" is something that Paul Krugman has been warning about for some time.)

Back to Mauldin:

While rebuilding inventories is a very good thing, that growth will only continue if sales grow. [...] And if you look at consumer spending in the data, you find that it actually declined in the 4th quarter, both annually and from the previous quarter.

Add into the mix the following: imports were lower, which is in fact a positive for GDP numbers; hours worked actually fell; and this is an advance number, likely to be revised downwards.

As David Rosenberg of Gluskin Sheff puts it, (again via Mauldin)

 No matter how you slice it, the GDP number today represented not just a rare but an unprecedented event, and as such, we are willing to treat the report with an entire saltshaker - a few grains won't do."