How can the government be off by $50 billion in healthcare expenditures from its first estimate in April to its final estimate two months later? Do they just take wild assed guesses with this crucial economic data? Or do they manipulate the numbers to achieve their desired outcome?
They have decreased their estimate of real GDP by over $100 billion since their first report. If your numbers are that horribly inaccurate, why report them at all until you are sure?
The talking heads on CNBC and the faux mainstream media journalists will blather about weather and assure you the future has never been brighter. Meanwhile, on the historical FACT side of the ledger, every single time in U.S. history that GDP was negative 1.5% or worse, the country was either in recession or about to enter recession. EVERY TIME!!!!
But the MSM will tell you why this time is different. So it goes.
Here Is The Reason For The Total Collapse In Q1 GDP
Submitted by Tyler Durden on 06/25/2014 09:23 -0400
Remember back in April, when the first GDP estimate was released (a gargantuan by comparison 0.1% hence revised to a depression equivalent -2.9%), we wrote: “If It Wasn’t For Obamacare, Q1 GDP Would Be Negative.” Well, now that GDP is not only negative, but the worst it has been in five years, we are once again proven right. But not only because GDP was indeed negative, but because the real reason for today’s epic collapse in GDP was, you guessed it, Obamacare.
Here is the chart we posted in April, showing the contribution of Obamacare, aka Healthcare Services spending. It was, in a word, an all time high.
Turns out this number was based on…. nothing.
Because as the next chart below shows, between the second and final revision of Q1 GDP something dramatic happened: instead of contributing $40 billion to real GDP in Q1, Obamacare magically ended up subtracting $6.4 billion from GDP. This, in turn, resulted in a collapse in Personal Consumption Expenditures as a percentage of GDP to just 0.7%, the lowest since 2009!
Don’t worry thought: this is actually great news! Because the brilliant propaganda minds at the Dept of Commerce figured out something banks also realized with the stub “kitchen sink” quarter in November 2008. Namely, since Q1 is a total loss in GDP terms, let’s just remove Obamacare spending as a contributor to Q1 GDP and just shove it in Q2.
Stated otherwise, some $40 billion in PCE that was supposed to boost Q1 GDP will now be added to Q2-Q4.
And now, we all await as the US department of truth says, with a straight face, that in Q2 the US GDP “grew” by over 5% (no really: you’ll see).
BOOM!!!
As I recall a number of people had procedures done before the end of the year, ahead of the insurance changes. There was likely to be a contraction in medical spending the following quarter, even with all the newly minted Medicaid and subsidized Obamacare subscribers. Admin I bet you wish you could just make up numbers for your budgeting and present them as real. It would save you a lot of time and aggravation.
What I find most amazing about this is the complete lack of awareness of any of this by your average person on the street. The vast majority are so unplugged from reality it is truly frightening. When the shit begins to spin out of control they will not have a clue as to why it happened and will have their shallow pool of curiosity filled by the MSM. It is to frustrating to contemplate.
Bob.
You know what this shit is about… it’s so they can bng the Q2 GDP numbers just ahead of the midterm elections.
Of course they make shit up, my favorite are the ‘estimates’ for unemployment figures (coughCaliforniacough). Like a good DJ, if you want ’em to dance you’ve got to keep the music playing. Which makes me think about Germany suddenly not overly excited about getting their gold back – which makes me think about idling Citation jets on the tarmac – which makes me think about how much more gold is there for our owners to load up? Which makes me think that when the last one goes wheels up they’ll turn off the music, and watch the real show on their tee-vee from the comfort of Patagonia.
DON’T WORRY. THE OBAMA WHITE HOUSE SAYS TO IGNORE THEIR OWN GOVERNMENT DATA. ALL IS WELL.
White House downplays weak Q1 GDP reading
The Obama administration on Wednesday downplayed the steep downward revision to first-quarter gross domestic product, saying it was due to volatile factors and contradicted by other measures of activity.
The Commerce Department stunned the financial market by reporting that growth was revised down to a 2.9% contraction in the first three months of the year from the previous estimate of a 1% decline.
The decline is “by war the worst quarter on record outside of a recession,” said Ted Wieseman, economist at Morgan Stanley. The cold weather can be blamed for about half of the drop, analysts said.
In a statement, Jason Furman, chairman of the Council of Economic Advisers, said “a range of other data show a more positive picture for the first quarter.”
Specifically, aggregate hours as measured by the Labor Department grew at a 1.4% annual rate in the first quarter and industrial output, measured by the Federal Reserve, increased 2.1% at an annual rate in the first quarter, he noted.
Based on these data points “one would have expected positive GDP growth of 2%-2.5% at an annual rate in the first quarter,” Furman said.
In addition, “more up-to-date indicators from April and May suggest that the economy is on track for a rebound in the second quarter,” he said.
Sometimes I think that our fucking Government uses the same maths as Douglas Adams used in Hitchhiker’s Guide…
RECIPRISEXCLUSON: a number whose existence can only be defined as being anything – other than itself.
Also, I believe that the same mathematics used in the Infinite Improbability Drive and Bistromathics are both used, somehow, in composing the shit the government spews out on a regular basis…
WE can only hope our own Government suffers the same fate as the Starship Titanic… sooner or later, I hope it suffers Massive Spontaneous Existence Failure…
Why Financial Reporters Are Clueless: They Copy And Paste Keynesian/Wall Street Propaganda
by David Stockman • June 25, 2014
This morning’s Q1 GDP revision might have been a wake-up call. After all, clocking in a -2.9%—-cold winter or no—it was the worst number posted since the dark days of Q1 2009. Well, actually, it was the fourth worst quarterly GDP shrinkage since Ronald Reagan declared it was morning again in American 30 years ago.
Stated differently, 116 of the 120 quarterly GDP prints since that time have been better. Even when you adjust for the Q1 inventory “payback” for the bloated GDP figures late last year, real GDP still contracted at a -1.2% annually rate.
Still, within minutes of the 8:30AM release, the Wall Street Journal’s news update did not fail to trot out the “do not be troubled” mantra. Not only did “…early second-quarter data indicates the economy has improved this spring as warmer weather helped release some pent-up demand” , but the reader was also advised in a declarative sentence that the US economy’s real growth capacity is far higher, implying that Q1 results were some kind of freakish aberration:
…growth over the first six months of the year likely fell below….. the U.S. economy’s longer term growth rate of just over 3%.
Well, here’s real GDP since the turn of the century. The average real growth rate is about 1.8%—-barely half the cited figure. So where does the 3% growth rate for “potential GDP” come from, then? The answer is that its Keynesian writ, and the pretext for the Fed’s endless monetary “accommodation” .
But doesn’t an actual 14-year trend trump theories that have become self-evidently irrelevant and macro-models that have been chronically wrong? In fact, the 3% potential GDP growth narrative is mocked by the fundamental arithmetic of true economic growth—-which is to say, labor hour gains and capital investment.
During 2013 the private business economy generated 194 billion labor hours—the same figure as 1998. Likewise, real investment in productive plant and equipment assets since 2000 has barely inched forward at a 0.8% annual rate—-or by less than 30% of its pre-2000 trend rate. In light of these virtually zero growth fundamentals, how could the Keynesian 3% potential GDP expansion model be presented as an axiomatic given?
So too with the winter weather bugaboo.
Residential investment …..fell by a 4.2% pace in the first quarter, revised from the previous estimate of a 5% fall. The housing market rebound, an important growth driver earlier in the recovery, was derailed in late 2013 by cold winter weather and rising mortgage rates.
Well, winter must have started in October.
When the daily narrative is this lame it is no wonder that our happy talk financial system drifts toward the wall. The Cool-Aid drinkers have simply lost touch with reality.
Do comets strike earf?
Here’s an interesting snapshot of economic stats by metro area throughout the US. You can choose your home city, then see how it ranks on employment, GDP, house prices, jobs, etc. compared to other metros. For each map, you can look at Recession, Recovery, or change from Recession->Recovery.
It’s interesting to see how well Austin / Houston have done (Zara’s told us as much) while other areas have imploded (California). Keep in mind, though, that this is from a leftist think tank; I have no doubt the numbers are just as fake as the government’s. The real insight is in the delta (change) rather than the numbers themselves.
http://www.brookings.edu/research/interactives/metromonitor#/M37980