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America Will Lose Any Trade War – Ep. 224

  • Earlier this morning we got the first look at Q4 GDP
  • As I suggested on the last podcast, in fact as I have been saying all along
  • We did see a sharp decline from the Q3 3.5% GDP
  • The consensus was for a 2.2% estimate for growth in Q4
  • And we came in at 1.9%
  • Quite a way below estimates and psychologically below the 2% number
  • Part of the reason was a big drop in exports
  • I talked about this last quarter
  • One of the reasons we got that 3.5% jump in Q3 GDP
  • Was the big surge in soybean exports, because of a drought overseas
  • Which created a temporary increase for U.S. beans
  • The rest of it was an inventory build, which I still think needs to be worked off
  • In fact, I think we’re going to work off a lot of it in the first quarter of this year
  • That’s the first estimate, and, who knows, they may downward revise it the next time they give us the numbers
  • If you now take the first 3 quarters of GDP growth, and use the first estimate for Q4
  • For the entire year of 2016 GDP grew at just 1.6%
  • That is the lowest number since 2009, tied with 2011, at 1.6% also
  • If you remember 2011 GDP growth was so weak that they launched QE3 for 2012
  • So they ended QE2, the economy started rolling over
  • And when they got that 1.6% GDP for the entire year
  • The Fed very quickly came out and launched QE3 the following year to goose the GDP back up
  •  What are they doing now?  Not only is the Fed not preparing to launch another round of QE
  • They are tightening monetary policy
  • They’re saying, “We’re going to raise interest rates 3 times, even though GDP is as low as it has been for the entire “recovery’
  • Even though the economy is decelerating, we are going to sedate it with rate hikes