GDP – Page 5 – The Burning Platform

And The Biggest Contributor To U.S. Growth in 2015 Was…

Submitted by Tyler Durden on 01/29/2016 09:39 -0500

By now, not even CNBC’s cheerleading permabulls can deny that the US is in a manufacturing recession: in fact, it is so bad that even the staunchest defenders of Keynesian dogma admit what we said in late 2014, namely that crashing oil is bad for the economy.

And yet, the “services” part of the US economy continues to hum right along, leading to such surprising outcomes as a stronger than expected print in Personal Consumption Expenditures. How can this be?

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Simple: one look at the chart below should explain not only how the “services” half of the US economy continues to grow, but just which tax, because that is how the Supreme Court defined Obamacare, is responsible for healthcare “spending” amounting to a quarter of the growth in US personal consumption expenditures, almost 100% higher than the second highest spending category which was… Recreational goods and vehicles?

And that, ladies and gentlemen, is how you convert a tax into a source of economic progress.

WORLD DROWNING IN DEBT

Via David Stockman

THE FED INDUCED FARCE

The minutes from the last Fed meeting were released on Wednesday afternoon. The minutes, along with a squadron of jabbering Fed heads lying about the economy doing great, pretty much locked in the most talked about .25% interest rate increase in world history. Evidently the Wall Street titans of greed have convinced the muppets higher interest rates are great for stocks, as the market soared by 250 points. As institutional money exits the market on these rigged up days, the dumb money retail investor buys into the market with dreams of riches just like they did with Pets.com in 2000, McMansions in 2005, and Bear Stearns in 2007.

The Fed has lost any credibility they ever thought they deserved by delaying this meaningless insignificant interest rate increase for the last three years, so they will make this token increase in December come hell or high water. They want to give themselves some leeway for easing again when this debt saturated global economy implodes in the near future. The Fed is trapped by their own cowardice and capture by the Wall Street cabal. If they raise rates the USD will strengthen even more than it has already. The USD is already at 11 year highs. It has appreciated by 25% in the last year versus the basket of world currencies. The babbling boobs on the entertainment news channels authoritatively expound with a straight face about the rise in the dollar being due to our strong economic performance. It’s beyond laughable, as the economy has been sucking wind since the day the Fed turned off the QE spigot in October 2014.

Chart of the Day

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CONFUSION, DELUSIONS & ILLUSIONS

Two recent surveys, along with numerous other studies and data, reveal most American households to be living on the brink of catastrophe, but continuing to act in a reckless and delusionary manner. There have certainly been economic factors beyond the control of average Americans that have resulted in real median household incomes remaining stagnant for the last 36 years. The unholy alliance of mega-corporations, Wall Street and bought off corrupt politicians have gutted the nation of millions of good paying jobs under the guise of globalization, while utilizing debt, derivatives and financial schemes to enrich themselves. The malfeasance of the sociopathic privileged class does not discharge the personal responsibility of citizens for living within their means. A lack of discipline, inability to delay gratification, failure to understand basic mathematical concepts, materialistic envy, absence of critical thinking skills, and a delusionary view of the world have left the majority of Americans broke and in debt.

The data that captured my attention was how little the average American household has in savings. Roughly 62% of Americans have less than $1,000 in savings and 21% don’t even have a savings account, according to a new survey of more than 5,000 adults conducted this month by Google Consumer Survey for personal finance website GOBankingRates.com. This dreadful data is reinforced by a similar survey of 1,000 adults carried out earlier this year by personal finance site Bankrate.com, which also found that 62% of Americans have no emergency savings for a medical crisis, car repair, or unanticipated household expenditure.

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IGNORE THE MEDIA BULLSH*T – RETAIL IMPLOSION PROVES WE ARE IN RECESSION

Here we go again. The dying legacy media will continue to support the status quo, who provide their dwindling advertising revenue, by papering over the truth with platitudes, lies, and misinformation. I have been detailing the long slow death of retail in America for the last few years. The data and facts are unequivocal. Therefore, the establishment and their media mouthpieces need to suppress the truth.

They spin every terrible report in the most positive way possible. They blame lousy retail results on the weather. They blame them on calendar effects. They blame them on gasoline sales plunging. That one is funny, because we heard for months that retail spending would surge because people had more money in their pockets from the huge decline in gasoline prices.

September retail sales were grudgingly reported by the Census Bureau this morning and they were absolutely dreadful. This followed an atrocious August report. The MSM couldn’t blame it on snow, cold, flooding, drought, or even swarms of locusts. So they just buried the story in their small print headlines. The propaganda media machine had nothing. They continue to spew the drivel about a 5.1% unemployment rate as a reflection of a booming jobs market. If we really have a booming jobs market, we would have a booming retail sector. The stagnant retail market reveals the jobs data to be fraudulent. The 94 million people supposedly not in the job market can’t buy shit with their good looks.

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Leveraged Financial Speculation to GDP in the US at a Familiar Peak, Once Again

Guest Post by Jesse

“I believe myriad global “carry trades” – speculative leveraging of securities – are the unappreciated prevailing source of finance behind interlinked global securities market Bubbles. They amount to this cycle’s government-directed finance unleashed to jump-start a global reflationary cycle.

I’m convinced that perhaps Trillions worth of speculative leverage have accumulated throughout global currency and securities markets at least partially based on the perception that policymakers condone this leverage as integral (as mortgage finance was previously) in the fight against mounting global deflationary forces.”

Doug Noland, Carry Trades and Trend-Following Strategies

The basic diagnosis is correct. But the nature of the disease, and the appropriate remedies, may not be so easily apprehended, except through simple common sense. And that is a rare commodity these days.

Like a dog returns to its vomit, the Fed’s speculative bubble policy enables the one percent to once again feast on the carcass of the real economy.

‘And no one could have ever seen it coming.’

Once is an accident.

Twice is no coincidence.

Remind yourself what has changed since then. Banks have gotten bigger. Schemes and fraud continue.

What will the third time be like? And the fourth?

Continue reading “Leveraged Financial Speculation to GDP in the US at a Familiar Peak, Once Again”

DEPARTMENT STORE RESULTS IMPLODING

The government issued their monthly retail sales this past week and four of the biggest department store chains in the country announced their quarterly results. The year over year retail sales increase of 2.4% is pitifully low in an economy that is supposedly in its sixth year of economic growth with a reported unemployment rate of only 5.3%. If all of these jobs have been created, why aren’t retail sales booming?

The year to date numbers are even worse than the year over year numbers. With consumer spending accounting for 70% of our GDP and real inflation running north of 5%, it’s pretty clear most Americans are experiencing a recession, despite the propaganda data circulated by the government and Fed. The only people not experiencing a recession are corporate executives enriching themselves through stock buybacks, Wall Street bankers using free Fed Bucks while rigging the the markets in their favor, politicians and government bureaucrats reaping their bribes from billionaire oligarchs, and the media toadies who dispense the Deep State approved propaganda to keep the ignorant masses dazed, confused, and endlessly distracted by Cecil the Lion, Bruce/Caitlyn Jenner, Ferguson, and blood coming out of whatever.

You won’t hear CNBC, Bloomberg, the Wall Street Journal or any corporate mainstream media outlet reference the fact retail sales growth is at the exact same levels as when recession hit in 2008 and 2001. Their job is to regurgitate the message of economic recovery and confidence in the future, despite overwhelming evidence to the contrary.

Retail sales are actually far worse than the 2.4% reported number. Excluding the subprime debt fueled auto sales, retail sales only grew by 1.3% in the last year. The automakers are practically giving vehicles away as their lots are stuffed with inventory. The length of auto loans and the average amount of auto loans are now at all-time highs. The percentage of subprime auto loans is surging to record levels, as defaults begin to rise. The percentage of vehicles being leased is also at an all-time high. To call these “auto sales” strains credibility. These people are either perpetually renting their vehicles or just driving them until the repo man shows up.

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WHY STOCKS WILL CRASH IN TWO CHARTS

“Things always become obvious after the fact” – Nassim Nicholas Taleb

“Facts do not cease to exist because they are ignored.” – Aldous Huxley

The S&P 500 currently stands at 2,126, fractionally below its all-time high. It is now 300% above the 2009 low and 34% above the 2008 and 2001 previous highs. Most people believe this is the new normal. They are comfortably numb in their ignorance of facts, reality, the truth, and the inevitability of a bleak future. When the herd is convinced progress and never ending gains are the norm, the apparent stability and normality always degenerates into instability and extreme anxiety. As many honest analysts have proven, with unequivocal facts and proven valuation measurements, the stock market is as overvalued as it was in 1929, 2000, and 2007.

Facts haven’t mattered, as belief in the infallibility and omniscience of Federal Reserve bankers, has convinced “professionals” to program their high frequency trading supercomputers to buy the all-time high. If central bankers were really omniscient and low interest rates guaranteed endless stock market gains, then why did the stock market crash in 2000 and 2008? The Federal Reserve’s monetary policies created the bubbles in 2000, 2007 and today. There was no particular event which caused the crashes in 2000 and 2008. Extreme overvaluation, created by warped Federal Reserve monetary policies and corrupt Washington D.C. fiscal policies, is what made the previous bubbles burst and will lead the current bubble to rupture.

Benjamin Graham and John Maynard Keynes understood how irrational markets could be over the short term, but eventually they would reach fair value:

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” – Graham

“The market can stay irrational longer than you can stay solvent.” – Keynes

Graham’s quote reflects the difference between hope and reality. This explains the ridiculous overvaluation of Amazon, Shake Shack, Twitter, Linkedin, Tesla, Google, and the other high flying new paradigm stocks. Story stocks soar because the herd believes the stories peddled by Wall Street and company executives. Five of these six stocks don’t have a PE ratio because you need earnings to calculate a PE ratio. In the long run the market will weigh the value these companies based upon profits and cashflow. It is the same story for the market as a whole. There is no question who is to blame for what now amounts to a three headed hydra of bubbles poised to burst.

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UM, YEAH… I’M NOT GONNA NEED YOU TO COME IN ANYMORE

This was the good old days. The vaunted Obama jobs recovery (waitresses, retail clerks, fry cooks, and maids) has petered out. The trade data earlier this week confirmed negative GDP for the 1st quarter. The Atlanta Fed model already shows only 0.9% GDP growth in the 2nd quarter. That will go negative as people with no jobs and those with jobs seeing their real wages decline have stopped spending.The 4th quarter GDP was boosted by citizens having to pay more Obamacare and heat for their cold houses. Winning!!!

Corporations are reporting declining revenues and profits, while using their spare cash to buy back their stock at all-time highs to boost executive stock compensation. Why spend money on capital investment or pay your workers more when you can pump your EPS, fire 5,000 people and outsource their jobs to India? It’s the American way.

The 99% are experiencing a recession in the real world. People around the globe are experiencing a depression. But Wall Street, aided and abetted by their Federal Reserve puppets and Politician cronies in DC, is joyous and overflowing with riches for the .01%. How long can they artificially prop up financial markets before the floor gives out?

If people in this country could just look up from their iGadgets and think for one moment…..

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RECESSION CONFIRMED

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.

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EVEN THE BLS HAS RUN OUT OF BULLSHIT – RECESSION CONFIRMED

It sure is lucky those Ivy League educated economists at those Wall Street criminal banks are paid millions per year. How else could we get such accurate forecasts about job growth in the U.S. These mental midgets predicted 245,000 new Obama jobs (bartenders, waitresses, house cleaners, clerks, fry cooks) in March. Even the BLS has run out of bullshit and lies. Those dramatic job increases in January and February were cut by 69,000 jobs. That is a 13% error. If I make a 13% error doing my job, I’d be fired. The BLS government drones have the power to move markets with their bullshit reports. It’s funny how the negative revision is put at the very end of their 2,000 word press release.

But getting back to the accuracy of Ivy League educated Wall Street economists – they missed by 50%. That entitles them to a $250,000 bonus. The Establishment Survey showed a pitiful 126,000 increase in low paying service jobs in March. Get prepared for the usual weather excuse. They’ve been using it for the last four months. How many companies make hiring decisions based on the weather outside? Really? Do these highly educated assholes actually expect us to believe the temperature outside stops companies from hiring? Hysterically, the BLS says that 72,000 phantom jobs were created by new companies, even though we know for a fact that more companies are closing than opening. This 126,000 number will be revised to a negative number two years from now in a press release on a Friday afternoon.

And it gets better. The Establishment Survey is the good news. The Household Survey, that calculates the fake unemployment rate, had even more dreadful results. It showed only 34,000 more people employed than last month. It shows only 130,000 more people employed YTD versus the 390,000 in the other survey. Which number do you not believe the most?

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S&P 500 EARNINGS COLLAPSE

Stocks are already overvalued by 100% by every historically accurate valuation model used over the last 100 years. The S&P 500 EPS dropped by 3.7% last quarter versus the previous year. Their actual earnings dropped by more than 5%. These mega-corps have been buying their stock back at a record rate, even though the market is at all-time highs, reducing the number of shares and artificially boosting EPS. It’s good for their Executive bonuses, don’t you know.

The Atlanta Fed is already estimating only a 1.2% GDP in the first quarter of 2015. It will be negative when everything is said and done. Manufacturing new orders have declined for 6 consecutive months. This only happens just prior to a recession or during a recession. Take your pick.

One of the major reasons manufacturing is faltering, besides the global recession, EU disintegrating, Japan blowing itself up, and China’s real estate boom going bust, is the tremendous appreciation of the USD. Companies selling US made goods in foreign countries see the price of their goods rise, as the dollar appreciates. It has appreciated 20% in the last 8 months against the basket of all foreign currencies, and now sits at an 11 year high. It is now 33% higher than the 2008 lows.

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FOURTH TURNING – THE SHADOW OF CRISIS HAS NOT PASSED – PART TWO

In Part One of this article I laid the groundwork of the Fourth Turning generational theory. I refuted President Obama’s claim that the shadow of crisis has passed. The shadow grows ever larger and will engulf the world in darkness in the coming years. The Crisis will be fueled by the worsening debt, civic decay and global disorder. I will address these issues in this article.

Debt, Civic Decay & Global Disorder

The core elements propelling this Crisis – debt, civic decay, and global disorder – were obvious over a decade before the financial meltdown catalyst sparked this ongoing two decade long Crisis. With the following issues unresolved, the shadow of this crisis has only grown larger and more ominous:

Debt

The national debt has risen by $7 trillion (64%) to $18.1 trillion since 2009 and continues to accelerate by $2.3 billion per day, on track to surpass $20 trillion before Obama leaves office and $25 trillion by 2019.

The national debt as a percentage of GDP is currently 103% (it would be 106% if the BEA hadn’t decided to positively “adjust” GDP up by $500 billion last year). It is on course to reach 120% by 2019. Rogoff and Reinhart have documented the fact countries that surpass 90% experience economic turmoil, decline, and ultimately currency collapse and debt default.
Despite the housing collapse and hundreds of billions in mortgage, credit card, auto, and corporate debt being written off, dumped on the backs of taxpayers and hidden on the Federal Reserve balance sheet, total credit market debt has reached a new high of $58 trillion.

Harvard professor Laurence Kotlikoff has been a lone voice telling the truth about the true level of unfunded promises hidden in the CBO numbers. The unfunded social welfare liabilities in excess of $200 trillion for Social Security, Medicare, Medicaid, and Obamacare are nothing but a massive future tax increase on younger and unborn generations. Kotlikoff explains what would be required to pay these obligations:

“To honor these obligations we could (a) raise all federal taxes, immediately and permanently, by 57%, (b) cut all federal spending, apart from interest on the debt, by 37%, immediately and permanently, or (c) do some combination of (a) and (b).”

The level of taxation and/or Federal Reserve created inflation necessary to honor these politician promises is too large to be considered feasible. Therefore, these promises, made to get corrupt political hacks elected to public office, will be defaulted upon.

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