GDP Report Offers Positive Headline, But Negative Details

08/03/2009 • Seeking Alpha

Friday’s GDP release was a sight for sore eyes. After experiencing sharp declines in the US economy for three consecutive quarters, the data for Q2 showed a decline of only 1% compared to the 1.5% that analysts were expecting. The news was enough to cause a number of economists to increase their forecasts regarding the “economic recovery” and was helpful in pushing stocks higher throughout most of the trading day. A 1% drop is significantly better than the 6.4% drop we had in the first quarter right? Actually, the answer is NO! A drop is still a drop. Consider the fact that we had the worst decline in 27 years for the first quarter, and that in the second quarter we were still declining. It’s tough to find a silver lining with this dark cloud, but that doesn’t keep analysts from spinning it in order to attempt to prop up the equity markets. As Mark Twain so eloquently said, “There are three kinds of lies: lies, damned lies and statistics.” The point is that you can make statistics i