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.
Continue reading “RECESSION CONFIRMED”
