“GO is a leading indicator of GDP by six to 12 weeks.” — David Ranson, chief economist, HCWE & Co.
I appeared today on CNBC with Rick Santelli to talk about the economy and the stock market. Watch it here.
One of the reasons I’ve been bullish on the stock market and the economy is because my gross output (GO) statistic, the top line of national income accounting that measures spending at all stages of production, has been picking up speed. In the two most recent quarters reported by the federal government’s Bureau of Economic Analysis (BEA), GO has been growing much faster than gross domestic product (GDP). That’s a good sign of a robust economy.
I wrote about this in my latest press release on GO, entitled “Rapid Growth in First Quarter Shows Economy is Not Slowing Down.” Read it here: http://mskousen.com/2017/07/rapid-growth-in-1st-quarter-go-economy-is-not-slowing-down/.
GDP, on the other hand, was weak, growing at only 1.4% in the first quarter in real terms. GO was growing almost twice as fast (2.5%), and my B2B (business-to-business) Index even faster (3.1%). GDP, as you may recall, measures only the final stage of production — finished goods and services only. It leaves out all the B2B transactions in the supply chain, which is bigger than GDP itself.