You know when Onion articles are more believable than government reported data, your country has jumped the shark. Last quarter your government reported GDP GROWTH of 0.1%. They ultimately admitted it was really NEGATIVE 2.9%. Now the government goes back and “adjusts” 15 years worth of their worthless data and surprise surprise, it was ONLY NEGATIVE 2.1%.

Now these BEA drones have the balls to report a 4% 2nd quarter increase. This figure is beyond laughable. It is complete and utter bullshit. Three months from now they will revise it to 1.5%. They needed a big number today because the world situation is going to shit and Obama’s approval rating hits new lows every day.

Zero Hedge points out that the BEA admitted to making wild ass guesses about the two biggest components of the surge because they had incomplete June data. The downward revisions will follow after they get their all-time stock market high based on bullshit data.

They had the gall to say that consumer spending spiked when major retailers have been reporting shitty 2nd quarter sales. Who do you think is lying?

They say that residential construction surged in the 2nd quarter. We know for a fact that new home construction plummeted in the 2nd quarter. All of the housing market is lower than last year. How can durable goods purchases be surging (appliances, furniture, electronics) when the retail sales figures for those retailers are negative versus last year?

This entire report is bogus. I know it, you know it, and the government drones know it. But CNBC and the rest of the captured corporate media will shout the awesome news from the mountaintops and the Wall Street shysters will pump the rigged market with their HFT supercomputers.

All is well in our Brave New World of finance and propaganda.


Q2 GDP Surges 4%, Beats Estimates Driven By Inventories, Fixed Investment Spike; Historical Data Revised

Tyler Durden's picture

Moments ago the Commerce department reported Q2 GDP which blew estimates out of the water, printing at 4.0%, above the declining 3.0% consensus, as a result of a surge in Inventories and Fixed Investment, both of which added over 2.5% of the total print, while exports added another 1.23% to the GDP number. The full breakdown by component is shown below.

What is interesting is that the Commerce Department announced that as a result of incomplete June data, the biggest components of the GDP beat, Inventories and Trade, were estimated. In other words, assume that future revisions of Q2 GDP will be lower, not higher, as the actual data comes in, and especially as the CapEx data, which contrary to the GDP report, has not rebounded. Speaking of revisions, today the BEA also released its annual revision of all data from 1999 to Q1 2014, which made last quarter’s -2.9% print a more palatable -2.1%, in the process throwing everyone’s trendline calculations off as yet another GDP redefinition was implemented.

The chart of the original and revised data is shown below.

We are currently combing through the years of revisions and will provide a snapshot shortly but for the time being here is Bloomberg’s take:

  • 2Q personal consumption up 2.5% vs est. up 1.9% (range 1.5%-2.9%); prior revised to 1.2% from 1%
  • Core PCE q/q 2% vs est. 1.9% (range 1.4%-2.3%)
  • Gross private investment up 17% in 2Q after falling 6.9% in 1Q
  • Residential up 7.5% after falling 5.3%
  • Purchases of durable goods jumped 14%, most since 3Q 2009
  • Corporate spending up 5.9% vs little changed q/q
  • Inventory accumulation added 1.7ppts to GDP


  1. U.S. inflation accelerates sharply in second quarter

    WASHINGTON (MarketWatch) – Inflation as measured by the Federal Reserve’s preferred price index surged in the second quarter to the highest annual rate in three years, potentially making the central’s bank effort at managing the U.S. recovery more difficult. The PCE index rose at a 2.3% annual rate in the April-to-June period, compared to 1.4% in the first quarter. That’s the fastest pace since the second quarter of 2011. And the core PCE that excludes food and energy climbed at a 2% clip, up from 1.2%. The Federal Reserve believes the pickup in inflation has been exaggerated by temporary factors that should ease soon, but if the central bank is wrong, it could be forced to raise interest rates sooner than it would like. The Fed would like to see inflation in an annual range of 2% to 2.5% – anything much higher or lower is viewed by most top bank officials as harmful to the economy in the long run. Top Fed officials were scheduled to meet Wednesday morning to plot their next move. The central bank is winding down a massive stimulus program on the expectation that growth will continue to improve.

  2. These horseshit reports used to make me angry, now they just make me chuckle. All that matters is for the lo-info voters to get their huffpo, yahoo and media matters headlines.

  3. My ridiculously liberal intern touted those numbers to me. Then I had him research Q1 GDP claims vs. revisions.

    He is now quiet.

    Then we talked about declining median household income, rising food/energy costs, and the skyrocketing cost of medical care or education.

    Damn it all, he seems almost morose. Shattering the delusions of the young is almost as fun as forcibly yanking a boomer’s head out of the sand.

  4. Obama will save us just hang in there a little longer. He has a pen and a phone and he”ll bring the hope and change you all so desperately need. Just wait and see, be patient, believe in Barack.

  5. Wow, these struggling retailers and contractors – around here – sure are being the friend of the consumer with all their sales and deals. Sales and deals that shrink their profit margins, even as their margins shrink. Everyone knows that corporations beholden to shareholders voluntarily cut their own throats when business is growing.

    Get freaking real.

    Illusions, fantasies and bullshit. From the Bureaus of Lies and Statistics.

    This crap only makes the inevitable crash so much more spectacular, “unexpected” and, in the end, destructive to a level not seen in a long time, if ever.

    It took over 20 years, a massive industrial base and a World War fought on multiple fronts to “fix” the economy and our stock markets.

    And yet tools like someone I am close to insist that the market “always comes back,” even as the number of years left to “invest” is way less than 20.

    So it goes, serenity now…

    1. How much did subprime loans fuel the GDP boom?

      By Steve Goldstein, MarketWatch

      WASHINGTON (MarketWatch) — It’d be tempting to think that the days of subprime loans fueling the economy were a product of the era of the aged or departed Ace Greenberg, Alan Greenspan and Angelo Mozilo.

      Except when you break down the growth in GDP, it’s clear that car and light truck purchases played a major role. And subprime loans, in turn, are financing those transactions.

      In the second quarter, motor vehicle and parts spending grew an annual 17.5%. Put another way, cars made up 3.7% of all consumer spending, the highest rate since the first quarter of 2008.

      Subprime loans make up about a third of new car-sales and two-thirds of used cars, according to data from Experian Automotive, at the end of last year. The New York Times, in a story about the subprime loan sector , pointed out that growth has climbed more than 130% in the five years since the crisis.

      No prizes, by the way, for guessing which sector was cut out of regulation by the Consumer Financial Protection Bureau in an amendment tacked onto the Dodd-Frank bank reform law.

      Ally Financial (NYSE:ALLY) , the financing arm spun off from General Motors, insists subprime isn’t much of their business. (In the first half, 13% of their originations came from non prime or customers with no FICO scores.) But an executive noted on an investor call that, right now, you see aggressive competition in the subprime sector, particularly the “deep subprime space.” And even at Ally, the delinquency rate is beginning to rise.

    2. Deja Vu GDP Stunner: Over Half Of US Growth In The Past Year Is From Inventory Accumulation

      Submitted by Tyler Durden on 07/30/2014 11:45 -0400

      Back in December 2013, when everyone was expecting a 3% GDP print for Q1, we did a simple analysis concluding that “Inventory Hoarding Accounts For Nearly 60% Of GDP Increase In Past Year.” We stated that this “hollow growth”, which is merely producers pulling demand from the future courtesy of cheap credit and assuming the inventory will be sold off in ordinary course of business without bottom-line slamming liquidations or dumping, and which further assumes a healthy US consumer and global economy, is a flashing red flag for the future of US economic growth. In fact, we were one of the very few who warned that Q1 GDP would be a disaster: “The problem with inventory hoarding, however, is that at some point it will have to be “unhoarded.” Which is why expect many downward revisions to future GDP as this inventory overhang has to be destocked.”

      This is precisely what happened in Q1, however it was blamed on the “harsh weather.”

      Alas, following today’s “spectacular” 4.0% GDP print following the predicted plunge in the US economy in Q1, we can again conclude that not only has nothing changed, but what we warned in Q4 of 2013 is about to happen all over again, and the inventory overhang (which incidentally was estiamted by the BEA and will certainly be revised lower next month) is about to slam future US growth.

      The chart below shows the quarterly change in the revised GDP series broken down by Inventory (yellow) and all other non-Inventory components comprising GDP (blue). Something to note: companies are traditionally loath to liquidate inventories unless the economy is clearly in a depressionary collapse as happened in late 2008 early 2009, when inventory dumping was the main reason why GDP remained flat if not negative even as other GDP components rebounded. As such, it is always the last component of GDP to go, and when it does watch out below.

      And, as we showed last time, where the scramble to accumulate inventory in hopes that it will be sold, profitably, sooner or later to buyers either domestic or foreign, is most visible, is in the data from the past 4 quarters, or the trailing year starting in Q2 2013 and ending with the just released revised Q2 2014 number. The result is that of the $675 billion rise in nominal GDP in the past year, a whopping 52%, or over half, is due to nothing else but inventory hoarding.

      Once again, enjoy the sugar high that inventory accumulation always generates in the current quarter. Just don’t expect it to last.

  6. The fact that 77 million Americans are in debt collection sure helps to demonstrate the effect of subprime loans on the economy.

    Consumers are increasingly noticing that the economy is getting worse, not better:

    GALLUP: U.S. Economic Confidence Down Sharply From Last Week

    WASHINGTON, D.C. — Gallup’s U.S. Economic Confidence Index dropped six points last week to -21 — the largest one-week drop since last October, and the lowest weekly index score since December. Americans’ confidence in the economy’s future waned more than their views of the current conditions.


  7. Ah, a surge in inventories. Bought with borrowed money to goose the GDP, but inventory that will not be sold quickly & will be marked down tremendously.

    Also, with a real inflation rate probably above 10%, GDP is really negative because they don’t subtract inflation.

    The Obomber Admin. idiots are doing more, unbelievably, to destroy the USA’s credibility than GW Bush. Who’d have thought U could do worse than that guy?

  8. Belive in Barack!

    1,2,3 o’clock, 4 o’clock Ba-rack…

    We’re gonna Ba-rack around the clock tonight!

    More like “We’re gonna Ba-rack around a Greater Depression in sight.”

  9. How does the bullspit “goodwill” component (overpayment of purchase price of corporations, now part of GDP as if it actually contributes to production), being added last July coincide with the inventory build?

    What if it ISN’T “build” but is just “hoard” – as in the stuff ain’t selling?

    What if we add hookers, blow, ganja, blackmail, extortion and murder-for-hire to our GDP, what will that do for the “economy?”

    Anyone that believes ANY of these stats, from the gubment, or even most “private” data-compilers, is a fool.

    SISO, shit in, shit out, that is what passes for information in this “information-age.”

  10. Quite:
    But an executive noted on an investor call that, right now, you see aggressive competition in the subprime sector, particularly the “deep subprime space.” And even at Ally, the delinquency rate is beginning to rise.

    Deep Subprime Space? Will that be a new Star Trek series>

  11. Quote:
    What if we add hookers, blow, ganja, blackmail, extortion and murder-for-hire to our GDP, what will that do for the “economy?”

    When the Greater Digital Depression hits, they will probably add stolen cars too.

    There’s no limit to phonying up the numbers!

  12. @Economan, why do I remind you of her? Funny guy…

    I vaguely remember hit hit, but what I do remember is that she was one beautiful mulatto.

    Nope, the last time my bloodline had that much African in it would have been sometime around the Civil War.

    And, I have NO musical talent. None. Nada. Zip. I dreamt of being a rock star when I was young, the scowls of anyone that heard me try pretty quickly woke me up to the fact that I wouldn’t be the next Pat Benatar, Joan Jett or Chrissy Hines.

  13. You guys must not listen to NPR. They were touting this yesterday as if it were 1927. Good times! 4% growth! Even more next quarter! Obama’s policies are working! 280,000 new jobs every month! Housing starts up, up, up! Obama did the right thing and auto sales have never been better! Economy hasn’t grown like this since records were first kept!

    Every single hourly update, all day long. I listen to it because it entertains the hell out of me, keeps my blood pressure up there and really cues me in to just how much Kool Aid these folks imbibe.

    Yesterday was a banner day for these folks, you’d have thought it was VJ day.

  14. TE, just having fun. Glad U & others post & it’s good to read stuff from a woman’s perspective too.

    & those 3 ladies U mentioned are rock goddesses & legends. U couldn’t have mentioned 3 better female rockers. I’ve seen Joan Jett many times live & they sound much better than the records.

    TBP should someday, after the collapse, have a cookout or something. Everyone can see the faces behind the sarcasm. Although it would probably be infiltrated by some government agent provocateurs who don’t like admin’s site.


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