January 28, 2012
The New York Times reports this morning on the latest U.S. GDP figures:
Growth Accelerates, but U.S. Has Lots of Ground to Make Up
The American economy picked up a little steam last quarter, growing at its fastest pace in a year and a half. Whether it can sustain that momentum is critical to millions of Americans out of work — and perhaps President Obama’s re-election chances…
But Nomura Securities analysts looked at the same glass and saw it decidedly half-empty, as Business Insider reports:
Core Economic Growth Slowed Sharply In Q4
In regards to this morning’s mediocre GDP report, Nomura cuts right to the chase in a note titled ‘Core Economic Growth Slowed Sharply’ in Q4.
Here’s their commentary:
Inventory building contributed 1.9 percentage points (pp) to growth in Q4 2011 after subtracting 1.4pp in Q3. The measure of final sales, which is a “core” view of the economy that removes the effect of inventories, grew at an annual rate of just 0.8% in Q4 compared with 3.2% in Q3. Under this perspective, the US economy slowed sharply in the final quarter of the year. The choppiness in quarterly growth in the back half of 2011 is partially due to the rebound following the dampening effect on economic growth stemming from the Japan earthquake and tsunami that hit on 11 March. The second half rebound was front-loaded into Q3. The same pattern can be seen when looking at the industrial production data, which also tracks the broad economy. In Q3, industrial production rebounded to an annual growth rate of 6.3% (following 0.6% in Q2) followed by slower growth of 3.1% in Q4. To smooth the effect of the rebound from temporary factors, economic growth in H2 2011 advanced at an average annual rate of 2.2% compared with 0.8% in H1.
And here’s the chart that demonstrates the point. The gray line is what Nomura calls ‘core’.