imported post
MarketTimer wrote:
Mike,
You can buy an I bond right now that yields 3.67%...GDP is 3.1%...
MT
You might want to know about this story pertaining to 4th Qtr GDP figures...
U.S. Says Canada Error May Have Affected 4th-Qtr GDP (Update3)
Jan. 31 (Bloomberg) -- U.S. fourth-quarter gross domestic product figures may be revised higher by as much as 0.5 percentage point because of an error in Canada's November trade report, economists said.
``If there is a mistake in the tabulation of data by Statistics Canada that was used in the U.S. trade estimates, and that does appear likely at this point, then the correction of that error would have an impact on BEA's estimate of GDP,'' said Ralph Kozlow, associate director for international economics at the U.S. Bureau of Economic Analysis. He didn't specify a figure.
The Commerce Department three days ago said the U.S. economy cooled to a 3.1 percent annual rate last quarter, damped by a record trade deficit that included a widening gap with Canada. StatsCan, the agency responsible for Canadian trade and GDP figures, today said it mistakenly underreported November imports from the U.S. by C$1.31 billion ($1.06 billion) on Jan. 12.
Estimates for how much the error will add to U.S. GDP when corrected range from 0.1 percentage points from Morgan Stanley in New York to 0.5 points by Joseph Carson, director of economic research at Alliance Bernstein in New York.
``This is just the first sign that the revision is going to be a plus and is going to be a substantial plus,'' said Carson, whose estimate includes a related assumption that December's trade gap also won't be as wide as the government projected.
Canada Error
Economist Ted Wieseman of Morgan Stanley projected a 0.1 percent revision, and Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York, predicted a gain of about a quarter percentage point. Regardless, a higher figure will bolster the Federal Reserve's plan to raise interest rates this week and in coming months, Shepherdson said.
``It does not change the big picture, but a number nearer to 3.5 percent would reinforce the impression that the Fed is right to continue steadily raising rates,'' Shepherdson said.
Canada's imports from the U.S. totaled C$19.5 billion in November compared with C$18.2 billion estimated earlier this month. The mistake would boost total U.S. exports for last quarter, leading to a smaller trade deficit. The trade figures subtracted 1.7 percentage points from GDP, the most since the second quarter of 1998.
StatsCan gets its raw data from import filings collected by the Canada Border Services Agency. The forms contain data on the value of the goods, a description and their origin. Customs computers automatically send StatsCan seven days worth of data every Monday. Customs technicians shut down their computer system Nov. 25 to install upgrades and that day's data wasn't submitted to StatsCan, spokesman Chris Kealey said.
Record U.S. Trade Gap
StatsCan since has taken measures to ensure the error doesn't happen again, Kealey said. The agency uncovered the situation on Jan. 24 and informed the U.S., he said.
The U.S. will issue its trade report for December on Feb. 10. The gap swelled to a record $60.3 billion in November, the Commerce Department reported last month.
Revisions to trade figures may have an effect above and beyond a single month's release and magnify the effect on GDP, economists including Wieseman said. A smaller trade gap in November would mean the economy was a stronger trajectory heading into the last month of the year and result in a smaller-than- projected deficit for the quarter.
``Our forecast for December trade even before today's release, if correct, would imply an upward revision to Q4 of several tenths,'' said Wieseman, in a report to clients. ``But, we should be clear to distinguish between the direct impact of the StatsCan error and the impact of economists' guesses for the December numbers relative to the BEA assumptions.'' Wieseman estimates the direct effect will boost GDP by just 0.1 percent.
GDP figures for the last three months of the year are released before data on December trade and inventories are available. For that reason, the government must make assumptions about that the figures will say when released in ensuing months.
The expected changes for November trade will probably mean the government's guess for the December number is also too high, said Alliance Bernstein's Carson. This, together with income levels that look too low relative to corporate profits, led to his prediction of a 0.5 percentage point boost to GDP when the revised preliminary figures are released Feb. 25.
