As we noted previously, the main reason why Q3 GDP surprised to the upside was thanks to yet another accounting gimmick, where it wasn’t the US consumer leading to US growth, as has historically been the case, but because the government stepped up, and boosted GDP by the most since Q2 2009.
So just which aspect of government taxpayer fund recirculation was responsible for this sudden boost in US “growth” (leaving aside the philosophical debate whether government capital allocations ever lead to grwoth)?
The answer is shown in the chart below showing the quarterly change in US National Defense spending: at by $30 billion, it was the most since 2008!
In short: thank you ISIS and renewed war on terror.
And what is more disturbing, as we noted earlier, is that the Fed had this data when it decided yesterday to end QE and to present its “surprisingly hawkish” assessment of the economy, suggesting the Fed is comfortbale with defense spending as a marginal leader of US growth (and is also not seeing any snow whatsoever this winter)
So… the “Fed war put” anyone?
Source: St. Louis Fed
via Zero Hedge http://ift.tt/1tTmF28 Tyler Durden