So there’s a math thing that says for the total to increase at least one of the components has to increase.

This means that if Q3 GDP is going to grow faster than Q2 the growth of the components has to add up, etc.

So while it’s just one data point subject to revision, etc. we are opening Q3 with a weaker NFP report, and the .3 personal income isn’t all that supportive, either. Nor are the anecdotal reports of mortgage originations falling off sharply encouraging.

And Q2 consumption was already less than Q1, exports decelerating, July car sales disappointing yesterday, etc. as reasons to expect Q3 to be better than Q2 begin to fade, just as initial hope has faded all year? Remember the initially higher GDP estimates being touted as ‘proof’ that tax hikes and sequesters didn’t hurt as feared? Even the President backed off on his warnings about what they would do to the economy?

And what about the idea that ‘when the govt gets out of the way’ fiscal drag is reduced and that negative to growth will be removed and growth will accelerate? Not true either, as that depends on private sector credit expansion rising to the occasion, which isn’t happening, especially with housing and cars going the wrong way.

And when the fiscal initiatives end, it doesn’t mean the deficit goes back up to where it was, but in fact it remains at the lower level, offering reduced ongoing support for aggregate demand, with that support fading via the automatic fiscal stabilizers should growth somehow continue.

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