One month ago I made this post. On that day our beloved government drones at the BEA announced 1st quarter GDP of POSITIVE 0.1%.




I called bullshit and made these comments:

We all know the government’s first reported economic number is manipulated to its best result in order for Wall Street shysters to levitate the stock market with their HFT supercomputers. Then subsequent revisions downward are downplayed and ignored. It’s the American way. This figure will be revised into negative territory over the next few months.

This report was an absolute disaster and PROVES we are in recession. Wall Street will be ecstatic and will levitate to new highs. If Obama can just get World War III started in the 2nd quarter, GDP will soar and economic recovery will have arrived.

Well the first revision is out today and guess what? I was right again. First quarter GDP is now down to NEGATIVE 1%. It will be revised down further. The talking heads will regurgitate the bad weather meme until the cows come home, but it was exports that were revised strongly downward. Did bad winter weather across the entire world keep people from buying our products?

The government drones still insist inflation was only 1.2% in the 1st quarter. That is beyond laughable. REAL GDP in the 1st quarter was closer to NEGATIVE 5%. The higher costs you paid for energy, food and Obamacare actually boosted GDP. Now that is fucked up.

For 99.9% of the people in this country we are experiencing a recession. Meanwhile, the stock market reaches new heights as the .1% have rigged the political, economic and financial system to only benefit themselves. Their time is coming. The music is still playing and they’re still dancing. But the music will end – sooner than they expect. Then there will be hell to pay.

US Economy Shrank By 1% In The First Quarter: First Contraction Since 2011

Tyler Durden's picture

Weather 1 – Quantitative Easing 0.

Spot on the chart below just how high the culmination of over $1 trillion in QE3 proceeds “pushed” the US economy.

Joking aside, even if the realization that nobody can fight the Fed except a cold weather front is quite profound, in the first quarter GDP “grew” by a revised -1.0%, down from the 0.1% first estimate, and well below the -0.5%  expected, confirming that while economists may suck as economists, they are absolutely horrible as weathermen.

Bottom line: for whatever reason, in Q1 the US economy contracted not only for the first time in three years, but at the fastest pace since Q1 of 2011. It probably snowed then too.

The breakdown by components is as follows:

Some highlights:

  • Personal consumption was largely unchanged at 2.09% from 2.04% in the first estimate and down from 2.22% in Q4. Considering the US consumer savings rate has tumbled to post crisis lows at the end of Q1, don’t expect much upside from this number.
  • Fixed investment also was largely unchanged, subtracting another 0.36% from growth, a little less than the -0.44% in the first estimate and well below the 0.43% contribution in Q4.
  • Net trade, or the combination of exports and imports, declined from
    -0.83% to -0.95%, far below the positive boost of 0.99% in Q4.
  • The biggest hit was in the change in private inventories, which tumbled from -0.57% in the first revision to a whopping -1.62%: the biggest contraction in the series since the revised -2.0% print recorded in Q4 2012.
  • Finally, government subtracted another -0.15% from Q1 growth, more than the -0.09% initially expected.

So there you have the New Normal growth, which incidentally now means that in the rest of the year quarterly GDP miraculously has to grow at just shy of 5% in the second half for the Fed to hit the “central tendency” target of 2.8%-3.0%.

And now we await for stocks to soar on this latest empirical proof that central planning does not work for anyone but the 1%.


13 thoughts on “GDP SHOCKER!!! – NOT”

  1. America’s Potemkin Economy—-Stuffed With Happy Meals, Ho-Hos And Lies

    by Charles Hugh Smith • May 29, 2014

    When rigged numbers are the basis of our success, we have failed.

    The essence of the U.S. economy is make it look good: never mind quality or long-term consequences, just make it look good today, this week, this month, this quarter: make the pink slime look like meat, make the company look profitable, make the low-quality product look good enough to close the sale, make the unemployment rate low enough to justify re-electing the toadies currently in power, make the body count of bad guys look good, and on and on–just makes the numbers look good now, the future will take care of itself.

    This is, of course, an attractive lie: the future is a direct consequence of present decisions and actions. It is remarkable how quickly we latch onto the notion that an endless parade of lies, manipulations and deceptions will magically produce a warm and fuzzy future of organic growth fostered by sound investments.

    Alas, an economy that relies on an endless parade of lies, manipulations and deceptions has only one possible future: failure–abject, total, undeniable, devastating. Equally remarkable is the current conviction that absurd extremes in manipulation–the billions of dollars of corporate buybacks pushing stocks higher, the socialization of the U.S. mortgage market, where privately issued mortgages (unbacked by government guarantees) have virtually vanished, the ginned-up unemployment number (remove enough potential workers from the count and the unemployment rate is soon near-zero)–will magically lead to an economy that no longer needs extreme manipulations to sustain itself.

    All these lies (if we are bold enough to call a lie a lie) and manipulations cannot possibly herald in an economy of honest reporting, market discovery of price and sound investments.

    This is equivalent to doing nothing but eating junk food while playing martial-arts videogames for months on end and then expecting to beat Tony Jaa in a real-world sparring match. Only people who’ve lost touch with reality would think that getting fat and wheezy playing videogames while eating Happy Meals and Ho-Hos would create a future that required an entirely different set of decisions and disciplines.

    America is completely out of touch with reality: gaming statistics and making credit free to financiers doesn’t create jobs, any more than stuffing one’s face with junk food and playing videogames prepares one to avoid getting beaten to a pulp in a real martial arts match.

    The misguided individual who reckons that foisting make it look good cons will magically create productive investments soon discovers that cons, lies and manipulations are all one-way streets: a make it look good con has only one future: a bigger con, to cover up the disastrous consequences of the initial con.

    The U.S. economy won’t fail in the future: it has already failed. Just as the delusional coach-potato who stuffs himself with Happy Meals and Ho-Hos to prepare for a real-world sparring match failed at the first bite, so too have we failed with the first lie, the first gamed statistic, the first Federal Reserve manipulation, the first fudged “profit.”

    Liars often entertain the fantasy that the initial make it look good illusion can eventually be replaced with real numbers and real integrity: but that too is a lie, a lie the liar tells himself. A house of cards constructed of lies, manipulations, fudged numbers, ginned-up statistics and cleverly constructed deceptions cannot suddenly become a structure built on integrity, accountability and honest reporting of facts; it will always be fragile, for a single truth and a single unvarnished fact can bring down the entire contraption.

    This is where our endless parade of lies, manipulations and deceptions has led us: to a future of more lies, manipulations and deceptions because untruth is a black hole; once our first manipulation pushes us past the event horizon, there is no way back to honesty, accountability and factual reporting.

    Officially sanctioned lies, manipulations and deceptions erode trust in institutions and the bedrock belief that honesty, integrity, accountability, hard work and productive investments are the keys to advancement.

    Once a people have been trained to swallow an endless parade of lies, manipulations and deceptions in order to get their share of the system’s swag, they lose the ability to practice accountability, integrity and honesty. Their own complicity renders them incapable of trusting the system or anyone else playing the make it look good game.

    Eventually they lose the ability to even recognize accountability, integrity and honesty, much less live them.

    America’s economy has already failed. It failed when our leaders turned to lies and manipulation to make it look good, and it failed when we bought the lies because it was so much less risky than demanding a factual accounting.

    When rigged numbers are the basis of our success, we have failed.


    Corporate profits adjusted for depreciation and the value of inventories sank 9.8% in the first quarter, the biggest decline in almost six years.

  3. Admin,
    I was listening to Bloomberg radio on the ride in and they were raving about corporate profits being at an all time high. Are you telling me that they were lying? How can this be, I mean they are a news organization aren’t they. They would make Bernay’s proud.

  4. John Williams says more to come. However, I look for drones from VA to be transferred BEA so they can do a better job of cooking the books.

    Promote Jury Nullification. Above all else be armed.

  5. Excluding Obamacare, US Economy Contracted By 2% In The First Quarter

    Submitted by Tyler Durden on 05/29/2014 09:21 -0400

    As if the official news that the US economy is just one quarter away from an official recession (and with just one month left in the second quarter that inventory restocking better be progressing at an epic pace) but don’t worry – supposedly harsh weather somehow managed to wipe out $100 billion in economic growth from the initial forecast for Q1 GDP – here is some even worse news: if one excludes the artificial stimulus to the US economy generated from the Obamacare Q1 taxpayer-subsidized scramble, which resulted in a record surge in Healthcare services spending of $40 billion in the quarter, Q1 GDP would have contracted not by 1% but by 2%!

    The history of healthcare spending’s contribution to GDP. The outlier needs no highlighting:


    And here is the breakdown of overall Q1 GDP and just the contribution from healthcare. In other words as the “favorable boost” to the economy from this most epic instance of capital misallocation fades, expect the drag to GDP to be even more acute, and will almost certainly offset the benefits of “unharsh weather.”


    1. Consumer Comfort Plunges To 6-Month Lows

      Submitted by Tyler Durden on 05/29/2014 09:54 -0400

      Despite record highs in stock markets and talking-heads explaining that a terrible Q1 GDP print is nothing to worry about, Bloomberg’s Consumer Comfort index collapsed to its lowest level in 6 months as ‘Buying Climate’ collapsed and economic expectations plunged from 48 to 42.5 (7-month lows). Those earning over $100k are happy and comfort soared but the comfort of those earning under $40k plunged to new cycle lows. The Fed won’t be happy… need S&P 2,200 for animal spirits to come back again…

  6. I’m so busy with work I can’t take a shit, but I still don’t feel comfortable going forward.

    PM’s are on sale and ammo is available again, people are relaxing, time to buy more?

  7. Don’t forget the recent change in measuring GDP: R&D is now included, jacking up GDP over previous estimates by several hundred billion. IOW, by the old way of measuring, we’ve already been in recession for a quarter or two.

    As far as consumer spending? Regularly purchased items–food and gasoline, e.g.–are up a lot. Spending more but receiving less is not the sign of a healthy economy.

  8. Desertrat,

    I would argue that we’ve been in recession since the NASDAQ bubble popped in 2000.

    They’ve manipulated the GDP beyond recognition and price inflation as measured by the CPI is a joke. If you were to measure legitimate economic activity and factor in true inflation levels, the economic pie in real terms has been shrinking for the better part of two decades.

  9. Admin’s right again. Anyone who isn’t a bought-off con man or lying media mouthpiece can clearly see what is going on. The liar-in-chief has issued edicts that “all is well”, we’re “in a recovery”; oh wait, the liberal progressive democrats have been told not to say that anymore, because it only makes people angry. Why? because people know they’re being lied to. It’s all a big lie, and once you start lying, you have to keep lying to cover up the previous lies, and pretty soon nothing is real.

    The stock market isn’t real. It doesn’t reflect anything anymore, it’s all a big, manipulated, rigged lie. The Fed and central planners are doing the rigging, trying to hold onto their power and wealth in the face of a slow economic collapse. We’ve reached our “Minski moment”, and it’s all downhill from here. Maximum debt in the system, maximum leverage and margin. It’s all going collapse in a smoldering heap.

    People get angry when they’re continually lied to. The more they’re lied to, the angrier they get. But as long as the government can continue to send checks to 50% of the population, all is well. People that have to work for a living, the suckers, know what’s going on. They’re being lied to, and stolen from, and spit on by the FSA. Obamacare is sucking more and more money from productive people to give free healthcare to millions more deadbeats. Premiums are going skyward, it’s only just begun. The price of everything is going higher, and wages are shrinking. One can only wonder how much longer the rigged stock market can continue. Not very long, I’m guessing, but nothing matters anymore in a manipulated, fraudulent market. Lies and fraud, what the USSA has become. Obama being the biggest fraud and liar of them all.

  10. Add in actual inflation numbers, the US economy’s been contracting almost every year since the dot com crash. Even when it seemed positive, say 2006, it was because people were taking on incredible amounts of debt, instead of the govt.

    There’s been no real growth since the late 1990s, just if different rates of contraction. Growth thru capital formation is the only real growth in a so-called capitalist country. No capital, no capitalism.


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