So let me get this straight. GDP, using the government bullshit inflation, was 0.1%. Two years from now it will be revised to -1.5%. In reality it was really -3.0%. We all know that 71% of GDP is generated by consumer spending. Government spending accounts for 19% of GDP. Over the last week we’ve seen numerous financial reports from retailers and restaurants that sales in their 4th quarter sucked and that customer traffic is flat or declining. This was before the 2% payroll tax hit. This was before the 15% surge in gasoline prices. This is before the drought induced food price increases hit during 2013. This is before your local real estate taxes are jacked up to pay for government union teacher contracts. This is before the full impact of Obamacare hits businesses and workers through higher premiums, shifting full time jobs to part time jobs, and driving small companies out of business. Taxes went up on rich people and small business owners. They’ll be spending less on luxury cars and houses in the Hamptons.
Whatever happens with the Sequestration kabuki theater, there will be a slowdown in government spending. Maybe a few government drones will lose their jobs. No one will notice. But these drones and this bloated government do spend money.
If 90% of GDP is based on consumer and government spending, then how does anyone expect GDP to go higher in the 1st quarter or 2nd quarter? It is mathematically impossible. If real wages are declining and taxes are higher, the consumer would have to ramp up credit card debt in order to increase their spending. Are they that stupid? It appears Wall Street thinks so. The stock market is within a couple points of its all-time high when GDP is negative and going lower. There is a major disconnect between reality and the propaganda driven high frequency trading delusions being doled out by the ruling financial class.
I don’t know how long these scumbags can keep the delusion going, but it will be a long way down when reality regains the upper hand.
Negative Q4 GDP Revised To Barely Positive, Misses Expectations
Submitted by Tyler Durden on 02/28/2013 08:42 -0500
From -0.1% to +0.1% (on expectations of a 0.5% print): the Q4 GDP revision was the smallest possible to make it seem that the US economy grew in the fourth quarter. A quick look at the components, however, reveals more of the same, with a small drop in the consumption contribution to GDP (from 1.52% to 1.47%), Fixed investment growing modestly, as well as imports, while the negative components remained roughly in line, with Inventories detracting the most from growth in Q4, or 1.55%. If JCP is any indication, expectations of aggressive inventory restocking in Q1 may be very optimistic. One thing is clear – the general GDP trendline is ugly, and we may now see downward revisions to Q1 growth forecasts in the aftermath of today’s number.
A breakdown showing the various quarterly GDP components:
Eddie says:
Oh, no! We’re in a recession. We need to increase the money supply, increase government spending and provide a safety net for the unfortunate Americans who voted for Obama.
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28th February 2013 at 9:46 am
Pete says:
Had my annual review a month ago and this week got the news from my boss that due to my great performance last year I get a 2.5% raise. This is what I get every year, except for 2009 when no one got any raises.
I told him that that’s not a raise, if you want to give me a raise it has to exceed the inflation rate or I’m losing purchasing power, not gaining any. He said, ‘the government says that there isn’t any inflation to speak of…’. At which point I said, ‘Bull shit’ and excused myself before I said anything else.
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28th February 2013 at 10:11 am
AWD says:
In the first quarter of this year, Bernanke will have created $135 billion dollars out of thin air, and the government will have spent $270 billion they don’t have (and will borrow). So, that’s about $400 billion of heroin pumped into the corpse of our economy/country ex consumers. And no matter what happens, even if God himself comes down from heaven, the stock market will continue to go higher.
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28th February 2013 at 10:11 am
BUCKHED says:
Drought..not in S.C.
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28th February 2013 at 10:17 am
BUCKHED says:
The Government needs to be like the Wallendas…..no safety net !!!!!!!!!!!!!!
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28th February 2013 at 10:22 am
AWD says:
All Of This Whining And Crying About The Sequester Shows Why America Is Doomed
http://theeconomiccollapseblog.com/archives/all-of-this-whining-and-crying-about-the-sequester-shows-why-america-is-doomed#sthash.oedFDul5.dpuf
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28th February 2013 at 10:27 am
Appalachian Trail Deblazer says:
@ Buckhead
WE “the people” are the safety net and BHO is destroying it / us.
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28th February 2013 at 10:37 am
Administrator says:
President Obama and his media allies are pushing the notion that sequester will destroy Western Civilization. States are saying that the cuts will devastate the economy; the Pentagon insists they will “hollow out” President Obama’s massive and voluble campaign against the sequester has a deep political motivation that is not apparent on the surface. He is engaging in a battle he knows he’ll lose. Republicans are not going to budge on agreeing to tax hikes to avoid the sequester’s spending cuts, and Democrats won’t opt for entitlement cuts to avoid it, either. So why is he fighting so hard when he has no leverage and battling a measure that will take effect on March 1 if Congress does nothing — something it does rather well?
Here’s the answer: He knows the economy is tanking. He realizes that we are headed for a double-dip recession. He expects unemployment to soar. He understands that his almost $300 billion in tax increases this year will drive us into recession. So he needs an out.
That’s where sequestration fits in: If it goes into effect, he can blame Republican budget cuts for the economic disaster that will probably unfold this year.
It will be the GOP’s fault. All the warnings of the dire impact of these across-the-board budget cuts — including a New York Times article about how states fear the economic impact of sequester — are designed to set up a massive blame game in which he excoriates Republicans for the recession.
Such a stance will, of course, be totally phony. Having raised payroll taxes by $200 billion; income taxes by $65 billion; health insurance premiums by 10-20 percent this year alone; and capital gains taxes by 9 percent; as well as having imposed a home sales tax of 4 percent, a package well north of $300 billion — Obama will blame sequester, amounting to $85 billion, for all the fallout his taxes will cause.
Obama has always survived by using excuses. The recession and unemployment were George W. Bush’s fault. The slow recovery was because of the tsunami in Japan, the collapse of Greece was uncertainty over the debt limit, political gridlock in Washington is Republican threats to shut down the government. His policies are always blameless.
But now his failed policies are really coming up for a pasting. With the economy about to slip into a double-dip recession (we are likely already there) and then fall some more, he needs a super-excuse. It’s hard to say that a spending cut of one-half of 1 percent of gross domestic product will be responsible.
So the big lie bears repeating again and again and again.
First it emerges as a policy statement, then as a warning and prediction, and finally it becomes an explanation and a justification — a poor substitute for a correct policy in the first place.
Obama realizes he is running out of time and excuses. Now into his second term, a falloff in the economy is less likely to be blamed on Bush and more likely to kindle discontent with Obama’s policies. In bad economic times, we tend to blame the president, not his predecessor.
Obama is looking to the Hoover/Roosevelt model in which the continuing high unemployment rate in Franklin Delano Roosevelt’s first term was universally — and correctly — ascribed to Herbert Hoover’s impact on the economy. But throughout FDR’s first term, unemployment dropped from a high of 26 percent in 1933 down to 13 percent in 1936.
FDR faced his own double dip when the economy crashed in 1937 and joblessness rose back up above 20 percent. The causes were the imposition of the Social Security tax — no benefits were paid out until 1940 — and the Wagner Act, which gave unions new power and radically increased wages. FDR couldn’t blame Hoover anymore. So he blamed the “economic royalists.” He said “the economic royalists hate me and I welcome their hatred.”
So Obama is copying the FDR playbook to avoid being identified with the second dip.
It didn’t work for FDR. He suffered huge losses in Congress in 1938 and only won again in 1940 because of the looming threat of war.
Obama’s blame game won’t work either. Voters will pay him back for his economic stewardship in 2014. Big time.
DICK MORRIS
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28th February 2013 at 12:07 pm
OF says:
And then people have doubts about humans having evolved from apes. What I have trouble with is the evolving part… is less hair already an evolution?
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28th February 2013 at 12:12 pm
Kill Bill says:
Everytime fuel prices edge up to 4+ bucks a gallon people stop spending. That means it costs me 65 bucks to fill a 16 gallon tank to fill up a $500 vehicle. Of course I’m going to drive less and walk around the mall w/o buying shit. As it is I have been eating Stink on a Shingle [Mushroom soup mixed with a can of tuna fish poured over toast]
But the same folks saying that recession is a bad thing applaud record profits by big oil.
Wacko Whirled
Dont Fret, Jack Loo will sell more debt to foreigners and save us all.
Hah.
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28th February 2013 at 12:36 pm
stalker says:
BUCKHED says:
“The Government needs to be like the Wallendas…..no safety net !!!!!!!!!!!!!!”
add leon russell’s Tightrope to it.
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28th February 2013 at 1:07 pm
Administrator says:
The Wallendas all fell to their deaths.
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28th February 2013 at 1:23 pm
AWD says:
It’s okay, all Obama’s rich friends, banksters, and Wall Street pals will bail him out, as he has bailed them out and kept them out of jail. Obama needs to be impeached before it’s too late.
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28th February 2013 at 3:01 pm
Administrator says:
Despite the new-found minuscule “growth” reported in this release, there are ample reasons to remain cautious about the economy:
– Even as revised this data represents an economy that is statistically in a dead stall, “growing” at a rate some 3% less than during the prior quarter (the greatest downward quarter-to-quarter change since the fourth quarter of 2008).
– This data is still reporting 4Q-2012, a quarter that in retrospect may be viewed as the last gasp of the “Great Recovery” — before there were significant economic headwinds created by reductions in consumer take-home pay, rising gas prices, sequestered federal spending and accelerating contractions in global trade. If all other components of the economy stay the same, those factors alone could remove something like 3% from real-time economic “growth” by the end of the first quarter of 2013: the normalization of FICA deductions alone could reduce consumer spending enough to pull the headline number down by 1%, the $.50 per gallon increase in gas prices could similarly remove another 0.5% from the headline number, weakening exports could easily reduce the headline number by another 1% and the federal budget sequestrations — if fully implemented and sustained — should eventually pull (at maximum, despite doomsday rhetoric) an additional 0.5% from the headline number.
– However, with respect to the “sequestrations”: political will and doomsday rhetoric notwithstanding, even if they are implemented by Congressional mandate (or inaction) there may be no reason to expect actual short term government spending to change. The budgetary shenanigans during the third quarter of 2012 (when a defense spending spree created a phantom boost to pre-election economic data by bringing some spending forward by a quarter — and incidentally across a fiscal year boundary) probably taught the US Federal bureaucracy that as a practical matter they can spend at will and with utter impunity from the budgetary intentions of the fiscally conservative majority in the US House of Representatives.
In the day-to-day reality of this Administration there simply may be no legal or political consequences to overspending Congressionally-approved budgets in pursuit of the perceived greater good.
Consumer Metrics Institute
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28th February 2013 at 7:51 pm