naked capitalism: US GDP comes in at minus 1%
* The downward revisions to 2008 should have been expected. They confirm how deep the mild depression was. It started in December 2007, creating a weak economy early in 2008, and only intensified due to the meltdown post-Lehman. Those like Larry Kudlow who were saying well into 2008 that no recession was going to occur were misguided.
* Because inventories have been purged so much in Q1 and Q2, I fully expect much better numbers in Q3 and Q4. Remember, a less negative inventory number translates into a net ADD to GDP. So, we don’t need to build inventories, only purge them less. That’s a guarantee for Q4 if not Q3.
* However, the fly in the ointment is consumer demand. It is still weak. Look at non-durable spending. If we don’t see a significant uptick come Q3, you should be worried.
* My call for Q4 2009 or Q1 2010 end to the recession still stands.