So the highly paid Ivy League educated Wall Street economist mouthpieces missed the GDP by a country mile. Give them a cigar and a million dollar bonus for keeping the muppets in the market. These worthless pieces of excrement can be replaced by a model. The Atlanta Fed model nailed the 1st quarter GDP two months ago. We all know this number will be revised two more times, because the government is essentially guessing on every item in the calculation. By the time it is final, in 5 years, it will be -2% or worse.
Anyone living in the real world knows we are in a recession. The fact that median real household income in 6% lower than it was in 2000 proves we have actually been in a 15 year recession. How much progress has the average American made since 2000? Their standard of living has fallen. They know it. They have attempted to maintain a semblance of their past standard by utilizing debt. The government, corporations, and individuals have all fallen for the false premise that debt can generate wealth. The debt has destroyed economic vitality, innovation, and investment.
We’ve had zero interest rates for six years and this is what we’ve got. Digging into the BEA report reveals the horror:
- According to the BEA the economy has only grown by 7.3% in the last TWO years. And that is before the government reported inflation of 2.5%. So, even using their own cooked numbers, the real GDP is only up 4.8% in two years. In reality, inflation in the average person’s daily living expenses are up by at least 10% in the last two years. Real GDP is negative.
- Personal consumption still makes up 68% of GDP, just as it did in 2008. Therefore, when consumers stop spending money they don’t have, the economy tanks. Consumer spending on goods collapsed in the 1st quarter and is barely above last year’s Polar Vortex first quarter. I thought we had a housing recovery and 10 million new Obama jobs. Why no spending? Think about this for a moment. The government is doling out billions in student loans and the car companies are giving away cars to deadbeats with subprime loans and still spending on goods collapses.
- Of course consumer spending on services soared to a new all-time high. Guess why. Obamacare. All that extra money you are paying to insurance companies, doctors, hospitals, and the government is considered a big plus for the GDP. Is it a big plus for you?
- The amount companies invested in plants crashed in the first quarter. It is 13% BELOW levels of 2008. How can an economy grow over the long-term if companies do not invest in plant and equipment? The S&P 500 companies are using all of their cash to buy back their own stock at record valuation levels. The foolishness and greed of corporate executives is breathtaking to behold. They are gutting our industrial base.
- Exports collapsed, confirming we have a global recession, in case you hadn’t noticed.
- The biggest benefit to GDP was a huge increase in inventories. This is a disaster in the making. If consumers aren’t consuming and foreigners aren’t buying our exports, companies will have to purge these inventories at drastically lower prices. The draw down of these inventories will crush the GDP in the 2nd and 3rd quarters.
- The only bright spot is that the government has stopped increasing their spending. The Washington gridlock has stopped Obama and his minions from doling out more free shit. Government spending is lower than it was in 2012. But it is still 13% higher than it was in 2008. The funniest part of the GDP calculation is that the government doles out hundreds of billions in entitlements which is counted as a plus to GDP and then the recipients spend the entitlement money and it is also included as a positive to GDP. What a wonderful system.
So there you have it. The government is telling you we haven’t entered recession yet. Wall Street economists will blame the weather. Do you believe them, or do you believe your wallet? Time to BTFATH.
US Economy Grinds To A Halt, Again: Q1 GDP Tumbles Below Expectations, Rises Paltry 0.2%
Submitted by Tyler Durden on 04/29/2015 08:42 -0400
And so the Atlanta Fed, whose “shocking” Q1 GDP prediction Zero Hedge first laid out nearly 2 months ago, with its Q1 GDP 0.1% forecast was spot on. Moments ago the BEA reported that Q1 GDP was far worse than almost everyone had expected, and tumbled from a 2.2% annualized growth rate at the end of 2014 to just 0.2%, in a rerun of last year when it too “snowed” in the winter. This was well below the Wall Street consensus of a print above 1.0%.
In other words, in the quarter in which the S&P rose to unseen highs, the economy ground to a near halt.
Only this time it wasn’t the snow, as the main reason for the plunge in economic growth was not only personal consumption which was cut by more than 50% from last quarter, tumbling to just 1.31%, but fixed investment, i.e., CapEx, which subtracting 0.40% from the bottom line GDP number, was the lowest print since 2009!
The fact that trade also subtracted a whopping 1.25% from the final number shows that while one can blame the weather for anything, the reality is that in the start of the year global trade did indeed grind to a halt, a picture which is only getting worse with every passing day.
The only good news: the massive inventory build, the largest since 2010, boosted GDP by nearly 3.0%. Without this epic stockpiling of non-farm inventory which will have to be liquidated at some point (and at a very low price) Q1 GDP would have been -2.5%.
Here is the full breakdown of the GDP number:
And a historical breakdown showing that the Q1 “snow in the winter” curse is alive and well.
When you apply a BS filter to the rigged government statistics, you realize America has been in a recession since 2000. And even with all the accounting gimmicks, GDP rises a paltry 0.2%.
QE4 is right around the corner.
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In other words, if US inventories, already at record high levels, and with the inventory to sales rising to great financial crisis levels, had not grown by $121.9 billion and merely remained flat, US Q1 GDP would not be 0.2%, but would be -2.6%.
Oh heck, just round it down to -3.0%
Which means that as this massive inventory overhang is eventually cleared out (once the US runs out of space to store all these widgets, gadgets and raw materials, here’s looking at you Cushing) and there has been $1.1 trillion in consistent inventory build in the past 3 years, US GDP will be pressured even more with every passing quarter, or else the moment of deflationary rapture when everyone is forced to liquidate and/or dump this inventory at the same time, will result in a monetary supernova which will leave the Fed with no choice but to literally paradrop money on the continental US.
Leading economists who missed this call believe that the second quarter will rebound as the economic activity was just temporary…….
To the moon!
2015-04-29 07:44 by Karl Denninger
1Q GDP: Boom!
Uh, oops.
Real gross domestic product — the value of the production of goods and services in the United States, adjusted for price changes — increased at an annual rate of 0.2 percent in the first quarter of 2015, according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.2 percent.
The immediate claim is that this was “the weather.” Uh, sure it was.
Let’s have a look inside.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, decreased 1.5 percent in the first quarter, compared with a decrease of 0.1 percent in the fourth. Excluding food and energy prices, the price index for gross domestic purchases increased 0.3 percent, compared with an increase of 0.7 percent.
That’s low, even on core, but not negative. The negative deflator is going to get goosed next quarter, and hard — oil prices have rebounded smartly in the interim. We’ll see if people “disregard” the (quite) hot headline number here come the June release.
Real personal consumption expenditures increased 1.9 percent in the first quarter, compared with an increase of 4.4 percent in the fourth. Durable goods increased 1.1 percent, compared with an increase of 6.2 percent. Nondurable goods decreased 0.3 percent, in contrast to an increase of 4.1 percent. Services increased 2.8 percent, compared with an increase of 4.3 percent.
Now that’s not good. But….. it does say (at least in theory) that we’ll see inventory depletion over the next month or two, which tends to blunt the potential for a recessionary environment. Nonetheless, this is weak.
Real exports of goods and services decreased 7.2 percent in the first quarter, in contrast to an increase of 4.5 percent in the fourth. Real imports of goods and services increased 1.8 percent, compared with an increase of 10.4 percent.
Eat the economists; they’re low-carb and most are high fat. They continually claim that while a strong currency will depress exports it stimulates imports as your currency goes further. Well?
The change in real private inventories added 0.74 percentage point to the first-quarter change in real GDP after subtracting 0.10 percentage point from the fourth-quarter change. Private businesses increased inventories $110.3 billion in the first quarter, following increases of $80.0 billion in the fourth quarter and of $82.2 billion in the third.
Oh oh…. but for inventory build the print was negative.
Current-dollar personal income increased $148.6 billion in the first quarter, compared with an increase of $146.9 billion in the fourth. The small acceleration in personal income primarily reflected an acceleration in government social benefits to persons that was partly offset by a downturn in proprietors’ income.
Welfare, welfare everywhere, but not a dollar earned from private industry…..
Finally, current-dollar GDP (adjusted for currency) was a statistical zero.
This is a crap report.
Sorry, can you repeat that – I was busy looking at the hot chick in the black mini thing stuck in the snow.
In all this talks about GDP, don’t forget that a year or two back, they added R&D expenditures to the GDP number. That’s an increase of some $300 billion over previous numbers.
DESERTRAT- Good point. 300BN ain’t chicken feed.
The R&D category jumped by $14 billion in the quarter. Without that fake adjustment, GDP would have been negative.
Nothing like Obamacare spending and higher utility costs to boost GDP. Recovery Bitchez!!!
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When they hit this fire with more QE, someone oughta tell them its only fuel now.
It absolutely amazes me as to how oblivious citizens are. To wit, if you have a middle class job, I have observed total obliviousness as to what is actually going on. In fact, if you are employed, most people thing the economy is doing ok , at the very least in a recovery. But my anecdotal observations see more retail vacancies, more homes being neglected, less children in order to keep up living standards–in other words a different living paradigm than just say 10 years ago. I am still not sure what this means–either I am getting older and it is just a normal evolutionary/generational thing, or is it something that is far more serious, and the citizens are unwittingly being led down a path.
I live in the DC area. Things are booming. Move bitchez.
I read an interesting – and well hidden – statistic yesterday.
Pharmaceutical sales DOUBLED from $600 BILLION, to $1.3 TRILLION between 2007 and 2014, all hail Obama.
Yep, thank you O’care! I now pay almost three times as much in premiums, plus 100% more in actual costs, but the part-time school cook that lives next door gets her Oxy and Xanax and Lipitor, all of which will kill her faster, so there’s that.
Go to the CDC and see that when you combine ALL legal drug related deaths, it is the number ONE killer of us all.
Meanwhile, GlaxoSmithKline’s swine flu vaccines were proven to have caused brain damage by English courts. The UK government (middle class) has to pay billions in damages to those affected because GSK was given the same immunity our traitorous politicians have given them.
Keep trusting these lying bastards friends.
Before long our money/wealth and collective futures will be dust, don’t let them take your very health and bodies too.
wip–point well taken. However you get 100 miles inland from the east and west coasts you enter another country. Both literally and figuratively.
Here again, you fail to see if it’s adjusted for sun spot activity the GDP is up almost 5%
I continue to call bullshit on the “reduced” federal spending.
The free healthcare insurance, pills, and millions of beaurcrats were added by federal spent money starting in 2013, but we believe spending is down from 2012?
In what freaking WORLD can you spend trillions more, yet spending falls?
Lies, damned lies, and US accounting reports. A whole new category of delusion.
Ladies and gentlemen, the Global Economic Hindenburg has just completed another gloriously successful period as reported by the BEA and the whole journey was fueled solely by the incredible buoyancy of counterfeit money. This marvelous machine created by the greatest criminals in financial history has enabled our Elite to become the richest men in the world. All eyes are fixed on this monetary miracle as it docks just momentarily.
For the still wet behind ears crowd: Those economist are not paid for the Truth; they are paid to make more noise than the Truth. They are government Truth Jamers.