Wednesday, November 01, 2006

GDP not so GRRRRReat!

The anemic GDP numbers from last week got some attention for coming in below 2% but when the real number crunchers went to work we got some staggering data.

On the cover page they announce that motor vehicle output accounted for 0.72% of the 1.6% GDP growth number. This immediately sent anyone with two brain synapses still firing to try and figure out how our auto industry contributed ANY growth given the disasters that GM, Ford and Chrysler are today.

The big three effectively had a fire sale on SUVs and light trucks this summer which led to a 5.5% decrease in wholesale prices which, due to mathematics of output/production, had the effect of boosting GDP by 3/4ths of a percent.

Without this number GDP might have been 0.9%. Look for Q4 GDP to better reflect the weakness in autos and Q4 might be an eye opening number.

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