The Economy Guy

Gasoline and oil jumped up as the oil traders didn’t see the two hurricanes in the Gulf of Mexico as causing any great damage to their industry.  (But, if you look at a projected map of the ‘G’ Hurricane, it’s headed straight at New Orleans)

The Dollar moved mostly sideways with a slight up ward bias.

Gold countered all the trends and rose in price.  Nice!!!

In the news today….

The US Government reported the 2nd Quarter 2008 GDP today.  It was up 3.3%, and this is a very nice number in a normal economy.  In fact, the number shows a good economy, or at least a flat, healthy economy.

Where is the truth in this report?  The jump in 2nd Quarter GDP was caused primarily by an increase in exports.  I’ve been reporting that export increases are the saving grace of the economy, and help blunt our economic weakness.  Also, the weak dollar helps exports enormously – and that’s what happened.

The second driver of this 2nd Quarter GDP was caused by the “rebate checks” sent out to all US taxpayers.  That was a one time event, and the kick in the economy will dissipate in future quarters.  So, from an economic viewpoint, this kick in the economy is a false sense of growth – it will go away – it is not sustained as you would want in a true economy.

My last point is that GDP numbers are revised from time to time.  Today’s number was the first revision.  They can go up and they can go down.  This one went up because of exports.  So, how good can this number be?  My point is that you must accept all government statistics with a grain of salt – not just blindly accept them because they came from the government.