Monday, October 04, 2004
I think that's because the data isn't at all going all in one direction.
There was a piece of good news Thursday when GDP was revised up by 0.5% for the second quarter. I've had a debate with an old friend for years whether the first number or the last number matters most for voter perceptions of GDP. I've argued it's the last for years, that people perceive the correct rate regardless of what is reported at first. But the lower number may help account for lower consumer confidence figures reported on Friday. That figure surprised many economists, where we expected it to rise rather than fall.
It seems to me highly unlikely that one can have high oil prices, four hurricanes wiping out wealth and disrupting production in the Southeast (which could account for the fact that factory orders fell slightly in September as well as inflating the jobless claims numbers). GDP numbers for 2004 are sliding a bit in sympathy, but the NABE report (that's the summary -- the full report I'm reading is for members only) shows growth of 3.7% for 2005, which would correlate to a jobs growth rate that averages 220,000 a month. So under the current expectations of the election, we're anticipating an additional 2.6 million jobs, consistent with the promises of both campaigns. The fade of growth in GDP for 2005 is largely due to the declining effect of the tax cuts passed a couple years ago.
Latest news also shows that the housing market is picking up as well, and the ISM figures, while down from the previous month, are a pressure index where any reading over 50 is positive for new orders going forward. The latest reading is 58.5. So some people will paint that as a bad thing rather than the good thing it is.
As we approach the next presidential debates, I'll try to get out some more information on the economic plans, the baseline forecasts, and any simulations for differences in policy. But it's late now and a long day ended. Off to popcorn.