So, how about the downward revision to second quarter GDP?
With the terrible June consumption numbers on top of the enormous June trade deficit, this was a no-brainer. What is notable, however, is that GDP for the first half of 2004 is growing at a modest 3.6% pace. You still have the rah-rah crowd telling us all is for the best in this best of all possible worlds, but don't you believe it. Overall GDP growth for 2004 is going to be a lot closer to 3% than to 5%. Big consumption numbers like those we saw today might push it up into the respectable 3s for 2004:III, but this is a house built on sand (aka the lowest possible savings rates).
The current account balance for 2004:II promises to be pressing on -5.6% of GDP. That is enormous and has to prompt the East Asians who are financing our economy to begin planning their exit strategies.