Though the first estimate of fourth-quarter U.S. gross domestic product (GDP) growth came in at a paltry -0.1 percent, expect future revisions to be upward, even if growth in the final three months of 2012 was anemic. There are several reasons.
First, the jobs figures for those months have been revised upward, while the unemployment claims figures have improved in the other direction.
Second, a lot of the weakness was due to reductions in government purchases by the military and at the state level. Why less spending by inefficient bureaucracies is somehow bad escapes me, but such is the nature of our National Income Accounts.
Instead, wait until the data come in about the reduced trade deficit and improved exports. You didn’t hear our president talk much about that in his State of the Union Speech this week. No way Mr. Frackophobe and Keystone Cop is going to give even lip service to the surge in petroleum liquids and natural gas production in America.
Oil imports to the United States are at their lowest levels since 1997: not a windmill or solar panel from San Diego to Maine has anything to do with it.
Two weeks ago, just before the number was released, I wrote about the investment consequences
that would result from strong economic growth in 2013. Looking at the markets since the punk GDP data, the story has not changed.
Stocks continue strong, advancing with breadth and volume. Softness in tech is more than compensated by strength in transportation and shipping. Bonds continue to be weak, although Treasury inflation-protected securities — bonds with interest and principal adjusted for expected inflation — are a bit better performing as traders position themselves for higher prices later this year.
As long as these two markets continue to speak with a consistent voice, readers can expect growth to be better in 2013 than most analysts expect. Investors should stay long and enjoy the bull market.
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