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: