1. Total GDP Change: As the press has reported the total change is less negative than before. It shows a positive trend and one should have some feeling of relief from this. However we must look at the details deeper.
2. Total Domestic Change: Here we have the change in domestic GDP investment. It is still quite negative and shows an improving trend but it is slow to recover.
3. Total International Change: International imports and exports have improved and are in fact above Q4 of 2008. This is an indication that the global economy is recovering in other areas as well.
4. Government Spending: The following chart depicts the change in Government Spending. This is anticipated but disturbing. It is the only one which is almost consistently high. The Federal Change is massive and it is this change which has moved everything up. The State change is also larger than many prior quarters and one would assume that the Stimulus is just pumping money here. Where the money is being spent is another matter.
5. Personal Consumption: The following chart is the GDP change in the Personal Consumption area. Not that it is not improving but that it also going down. People are not buying for themselves. We were surprised at this because this tends to show a loss in confidence. This is a trend we believe tells a great deal about the individual sentiment.
6. Inflation: As we have done before we have calculated inflation from its underlying components, namely changes in GDP, changes in money velocity and changes in M2. The interesting fact here is that inflation is starting to rise if ever so slowly. This is what we have been fearing all along. However the cause is debatable. The drop in personal expenditures and the explosion in Government expenditures seems to indicate it is from Government spending.
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