US GDP exceeds expectations 1

CNBC has the story Stocks in Asia gain following stronger-than-expected US economic data

US GDP exceeds expectations

Overnight on Wall Street, the Dow Jones Industrial Average slipped 69.16 points to close at 25,916 and the S&P 500 shed nearly 0.3 percent to finish its trading day at 2,784.49. The Nasdaq Composite also lost about 0.3 percent to close at 7,532.53.

The losses stateside came despite the release of data which showed the U.S. economy grew at an annualized rate of 2.6 percent in the fourth quarter of 2018, according to the U.S. government. That was above forecasts of economists polled by Dow Jones, who expected the economy to grow at a pace of 2.2 percent.

Maybe there are enough astute investors who realize the GDP, which grew at 2.6%, includes gains made in the FIRE sector (Finance, Insurance, and Real Estate) Any growth in that industry is a dead weight overhead on the economy, and actually subtracts from the productive capacity of the economy.

When Trump brags about the growth of GDP, he surely hopes that most of the people in the 99% don’t know this about the GDP. Then again, maybe Donald Trump doesn’t even know that buying and selling real estate does not add anything to the economy. Building real estate does add something if it is useful for carrying out business or satisfying a real need.

Yes, there is fake news, and it comes out of Donald Trump’s mouth when he talks about stories like this one.

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One thought on “US GDP exceeds expectations

  • SteveG Post author

    If you buy a house for $200,000 and sell it a few years later for $400,000, that is asset price inflation. The difference in price did not add $200,000 to the capacity of the economy.

    When the original house was built, that added a housing unit to the economy. That was an addition.