Some Bad Economic News That Everyone Is Mistaking For Good

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		Tech Entertainment Wall Street Markets Strategy Sports Lifestyle Politics International Video Latest Thursday, April 12, 2012 Some Bad Economic News That Everyone Is Mistaking For Good Today the February trade balance came in narrower than expected. Specifically, the trade balance was -$46 billion vs. estimates of -$51.8 billion. This is being called good news because the trade deficit is subtracted from GDP. Therefore, technically Q1 GDP will be higher than previously thought. And as such, various banks are now cranking up their Q1 GDP estimates. Yay! Markets higher! But it's not actually good news! Despite the fact that the trade deficit comes out of GDP, it turns out historically that larger trade deficits coincide with bigger GDP gains, and vice versa. The above chart nicely shows what we're talking about. The red line is the year over year change in the trade deficit. When the red line drops a lot it theoretically means that the trade deficit is improving, but what it means is that the trade deficit shrunk a lot from that same period the year before. The blue line is the year-over-year percentage change in GDP. The pattern is not hard to see. The more the trade deficit shrinks, the worse it is for GDP. Read » Also On Money Game Today: Seriously, These Chinese Malls Don't Have Any People In Them There's Still A Place Where They Will Pay You To Store Gold Jeffrey Sachs: The World Bank Doesn't Need Another Banker 14 Jaw-Dropping Facts About The Spanish Economy Advertisement CHART OF THE DAY: Apple Is About To Be Worth More Than All The Companies In Spain, Portugal And Greece COMBINED CHART OF THE DAY: The Deja Vu Chart We've Been Worried About All year CHART OF THE DAY: Big Investors Are Most Excited About This Sector Share this: Facebook Twitter Digg Reddit StumbleUpon LinkedIn The email address for your subscription is: dwyld.kwu.jobhuntportal11@blogger.com Change Your Email Address | Unsubscribe | Subscribe | Subscribe to the Money Game RSS Feed Business Insider. 257 Park Avenue South, New York, NY 10010 Terms of Service | Privacy Policy

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