Fed Expert Network Lowers Q1 GDP Expectation From 4% To 2.3%

Tyler Durden's picture

And so the GDP revisions start coming fast and furious. Following repeated warnings from Goldman (which also modestly cut its GDP forecast), implying that the only firm that matters is about to cut GDP across the board, Fed "Expert Network" Macroeconomic Advisers, headed by the inimitable Larry Meyer, has decided to provide value to its client(s) and slash Q1 GDP from 4% to 2.3%. This means that Joe LaVorgna is furiously coming up with scenarios that blame everything from snow to gamma rays to the dog eating his excel spreadsheets for why he is about to trim his permabullish outlook.

The NYT's Leonhardt reports (this may well be behind a paywall).

Given this recent history, you might think Fed officials would now be doing everything possible to ensure a solid recovery. But they’re not. Once again, many of them are worried that the Fed is doing too much. And once again, the odds are rising that it’s doing too little.

Higher oil prices, government layoffs, Japan’s devastation and Europe’s debt woes are all working against the recovery. Already, a prominent research firm founded by a former Fed governor, Macroeconomic Advisers, has downgraded its estimate of economic growth in the current quarter to a paltry 2.3 percent, from 4 percent. The Fed’s own forecasts, notes that former governor, Laurence Meyer, “have been incredibly optimistic.”

Why is this happening? Above all, blame our unbalanced approach to monetary policy.

One group of Fed officials and watchers worries constantly about the prospect of rising inflation, no matter what the economy is doing. Some of them are haunted by the inflation of the 1970s and worry it may return at any time. Others spend much of their time with bank executives or big investors, who generally have more to lose from high inflation than from high unemployment.

Look for the market to surge as collapsing GDP expectations are, you guessed it, used as an excuse to BTFD.

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cossack55's picture

I'm thinking 2.3% is still a little overly optomistic. 0.23% would be a little more realistic. I know, reality doesn't exist.

SWRichmond's picture

We're deficit-spending 11% of GDP, and GDP is "growing" by 2.3%.  Who the fuck are we fooling?

malikai's picture

I was just going to say net GDP is more like -10%.

MarketTruth's picture

Since this is all make-believe numbers...

GDP is up 2.3% yet the Fed targets inflation (currency devaluation) at 2%. So that means less than a mere ~0.3% gain.

Of course all these numbers are make-believe, yet even by their own numbers it looks lackluster at best.

falak pema's picture

the hindmost fool in the rat race.

Xibalba's picture

epistemological presupposition's have created a worldview for the Fed that is inconsistent with reality. 

snowball777's picture

Translation: those fuckers are batshit crazy.

cabernet's picture

In this world, sounds like a reason to buy stocks.



I Am The Unknown Comic's picture

Yep.  Cabernet, I just can not wait to hear how this is "all good" for US stocks.  I'm conflicted because tuning into CNBC literally can make me ill, but on the other hand I really want to hear what will surely be the grandest of spins.  Let me guess....a GDP revised this much lower will be easily beaten and therefore later headlines will read "GDP above expectations." 

WOW!  I think I've just been promoted to a CNBC "Expert" guest!

overmedicatedundersexed's picture

not to worry, Obuma to speak on our national energy crisis..he will fund unicorn fart collection,wind ferry dust, sunshine skittle collectors..

the markets will tank on his hopium as he shows the economy is in the hands of insane men and women.

dogismyth's picture

The Department of Energy was instituted in 1977 under Carter for the expressed purpose of reducing foreign reliance on carbon products.  Their budget generally ranges from 10 to 20 billion dollars per year.  So let's see...that totals to about 500 billion dollars since the inception of this worthless department.  And what will we hear Obama say about the DOE today and their nefarious existence....we need to cut foreign dependence on oil by......(fill in the blank) by ................  (fill in the blank).

And the bullshit continues from this fascist government whereupon institutions continue to be constructed and implemented to serve the good of mega-corporations and crony capitalism.

From wiki...

President Barack Obama unveiled on May 7 a $26.4 billion budget request for DOE for fiscal year (FY) 2010, including $2.3 billion for the DOE Office of Energy Efficiency and Renewable Energy (EERE). The budget aims to substantially expand the use of renewable energy sources while improving energy transmission infrastructure. It also makes significant investments in hybrids and plug-in hybrids, in smart grid technologies, and in scientific research and innovation.[5]

As part of the $789 billion economic stimulus package in the American Recovery and Reinvestment Act of 2009, Congress provided Energy with an additional $38.3 billion for fiscal years 2009 and 2010, adding about 75 percent to Energy's annual budgets. Most of the stimulus spending was in the form of grants and contracts. Yet, according to Robert Alvarez, "Even with additional stimulus money, spending for bombs and cleanup will still exceed those for actual energy-related functions. Spending for the weapons complex is currently comparable to that during the height of the nuclear arms race in the 1950s. The big difference now — half of that money is spent dealing with the Cold War's environmental legacy.[6] "

Its all a farce if you haven't figured it out yet.  Has anyone american citizen EVER benefited from the DOE and its policies?  The only solution is to End the Fed.  Not the federal reserve but this useless fucked up US federal government that has continued to destroy this country from day one. 

Now back to your regularly scheduled program...


This is not a joke!!!!!!!!!!!!!!!!!

Snidley Whipsnae's picture

The DOE brought us that wonderful new product ethanol. You know, the stuff that now comprises 10% or more of the 'gasoline' that goes into your tank... and drops your gas mileage 10% or more... while fouling fuel injectors and ruining seals in your fuel system.  

The corn farmers love the DOE. I buy gas from the one station left in town that doesn't sell that crap.

cranky-old-geezer's picture

And that one station might be none other than the hated BP perhaps?

Not saying I hate BP, I like their no-ethanol gas. 

At least they're not in the corn-to-ethanol scam and not contributing to starvation of millions of people.

I couldn't care less what they did in the Gulf.  If it wasn't them it would be someone else and may well be someone else next Gulf disaster.

And it really wasn't BP anyway, it was Transocean who fucked up and let the well blow out with a fucked up BOP that didn't work.

Vashta Nerada's picture

The answer to me is to close down the DOE.  Along with the EPA, the FDA and the Dept. of Education.  All of them are beyond the scope of what we allow the federal government to be involved in per that old piece of paper in the glass case.

Robert Neville's picture

I wonder how many oil wells we could drill for $500 billion.

101 years and counting's picture

2.3% annualized over a year is about $250 Billion in growth, or 62.5 billion for the quarter.  And, it will only cost the government about $450 billion in deficit for the 3 months to achieve this. 

Spalding_Smailes's picture

At least Japan has turned the corner ....


From CNN

Tokyo (CNN) -- Smoke was spotted at another nuclear plant in northeastern Japan on Wednesday, Tokyo Electric Power Co. said.

The company said smoke was detected in the turbine building of reactor No. 1 at the Fukushima Daini nuclear power plant around 6 p.m. (5 a.m. ET).

Smoke could no longer be seen by around 7 p.m. (6 a.m. ET), a company spokesman told reporters.


falak pema's picture

the report didn't say if it was Apache on warpath smoke or holy smoke!

malikai's picture

Smoke could no longer be seen by around 7 p.m. (6 a.m. ET), a company spokesman told reporters.

Um, what time is sunset? Maybe that's got something to do with one's inability to see smoke?

fuu's picture

I've been wondering when they would start talking about Daini again. There were 4 reactors there with troubles the first week and then nothing since then.

Tyler Durden's picture

You do realize of course that this refers to the OTHER Fukushima power plant, Fukushima Daini which is 10 km away?

Smoke was temporarily seen at the No. 1 reactor of the Fukushima
Daini nuclear power plant, but it soon disappeared, its operator said

Tokyo Electric Power Co. said smoke was detected at around 5:56 p.m.
from a power distribution panel on the first floor of the turbine
building at the reactor. The company, known as TEPCO, said it made a
call to a local fire department.

The announcement came at a time when efforts are under way to contain
the nuclear crisis at the radiation-leaking Fukushima Daiichi nuclear
complex, hit by the devastating March 11 earthquake and ensuing tsunami.

The Fukushima Daini plant is located about 10 kilometers from the
crippled Fukushima Daiichi plant, and its four reactors have been stable
in so-called ''cold shutdown'' after suspending operations following
the quake.

Spalding_Smailes's picture

Yes, I was being Fidel Sarcastro, we are in the second inning of this catastrophe .... Have you seen Trav 7777 ?You posted about this but its funny how things leak out after the fact .....

Somber prime minister addresses nation, says country on “maximum alert” following discovery of toxic plutonium pools…

Highly toxic plutonium was the latest contaminant found seeping into the soil outside the plant, Tokyo Electric Power Co. said Monday. …

The discovery of plutonium, released from fuel rods only when temperatures are extremely high, confirms the severity of the damage, [Nuclear safety official Hidehiko] Nishiyama said.



cranky-old-geezer's picture

After a 9.0 earthquake I believe we can safely assume all reactors in Japan are FUBARed.

jelyfish's picture

"Once again, many of them are worried that the Fed is doing too much. And once again, the odds are rising that it’s doing too little." That's bull sh**!

Racer's picture

Snow in winter? Wow, whatever next? Sun in summer?

and falling leaves in autumn?

knukles's picture

Tsunamis in February, Neutron Beams in March, Radiation Blossoms in April, Open Running Radiation Pustules in May....

Like Vivaldi's the Seasons, so wonderous....

bingaling's picture

God forbid they minus inflation from that number !

sodbuster's picture

>for why he is about to trim his permabullish outlook.<


No need to trim his outlook, the more bad news, the more better.

Mercury's picture

If the CPI is suspect and the GDP deflator is based on the CPI, what kind of real GDP number does that imply?

defn8Dog's picture

Hey, what the # is BTFD? 

kaiten's picture

Infinity and beyond, like the coming QEs

Kina's picture

Buy The Fucking Dips

GOSPLAN HERO's picture

Crazy Train -- dedicated to Obummer, Ben and The Fed:

I've listened to preachers
I've listened to fools
I've watched all the dropouts
Who make their own rules
One person conditioned to rule and control
The media sells it and you live the role

falak pema's picture

Its now called the Benbernankification Indicator. It's pegged to QE.

writingsonthewall's picture

"Higher oil prices, government layoffs, Japan’s devastation and Europe’s debt woes are all working against the recovery"

What tripe - these are merely 'events' - the problem is that when half the world is on it's knees it needs a nice long period without surprises and without turmoil in order to recover.

...and when, in your lifetime, has there EVER been a period such as that?


Oil prices, Japan, and Europes debt wouldn't even make the headlines - if it weren't for the fact we're all in the economic mire, remember this was all perpetrated by the banks in their mis-understanding of risk and their lack of knowledge of black swans.


Only fools rush in where angels fear to tread.

falak pema's picture

...and mad men decide to wed. Don't let your son/ daughter marry until they solve the Fukushima problem, one way or other. You might have surprises 9 months down the road.

I'm for long vacations in the Antarctic. Global warming is coming there fast. Take your bathing suits, better still, cavort with the penguins.


High Plains Drifter's picture

The FED says a there will be a lower GDP???  oh geez, you think.........

SheepDog-One's picture

Yes GDP to be way down, depression confirmed now, but in the meantime its stock pumpin time! What a fucking joke.

falak pema's picture

Smaller growth projection  in 1Q 2011 means green light to QE-3 away to end of year.

How else would WS assets levitate and the barbarian be kept outside the Empire's gates?

Cognitive Dissonance's picture

And so the GDP revisions start coming fast and furious.

But (conveniently) not in time to effect the first quarter, despite the fact that even before Japan there were problems going forward. Anyone notice how regardless of when the actual bad news comes out (unless it's a real black swan that can't be managed and clearly Japan was managed) the bad news is allowed to be disseminated and absorbed only during specific time periods by the financial thought police and public myth creators?  

Someone please tell me it's all just chance and not tied to the financial self interest and survival of the collective banking/corporate/governmental group.

malikai's picture

What, you don't see the green shoots? Did you forget your hopium shot this morning?

Cognitive Dissonance's picture

This hopium junkie is all worn out. All my veins have collapsed and I'm now reduced to shooting up between my toes and fingers. When will they make this shit in pill form?

malikai's picture

They do make suppositories. You just have to use their special applicator:


Cdad's picture

I would like to be able to tell you that it is all just chance.  However, no matter what news or related move we are talking about, almost all of them appear outside of our market hours.  And even when news does break during market hours, almost always, the corresponding move in equities does not occur until some later point in time when banking/corporate/governmental groups can gather their resources to "manage" said movement, tempering things with futures accounts, typically.

Toss in a good measure of foreign involvement, especially by communist Asian entities that can access our markets, and what you have is entirely unmanageable....which is why retail participation is approaching nil.

I've been stubborn about it, not wanting to really discover all of this, but I have arrived at the conclusion that the market is almost impossible to trade...and probably a bit more than "almost" as well.

Now, if we could just reduce the number of inside baseball, entirely immoral, criminal syndicate Wall Street bankers actively involved in the markets, including cutting off their co loacated insider computer access, and then also limit communist Asian access, maybe we could get back to trading?


When "the people" fully come to understand that our genius government leaders, with the cooperation of our entirely corrupt banking system, have spent $5 trillion of their children's future dollars...to land here at a GDP expectation of 2.3% [coupled with 17% unemployment]...only then can we emerge from this cloud of pixiedust, and comes the epiphany of revolution.

These things cannot remain.  These people cannot stay in office.  These banks can no longer be allowed to exist.  The status quo will have to go or we shall remain mired here for a very, very long time.

Cognitive Dissonance's picture

One thing man is always free to do is to dream. In fact, we are encouraged to dream instead of actually acting. So in some ways dreaming for change, without the corresponding action, is the root of our self enslavement. This is how the Internet is being used against us while fanning our desire to be free. The discourse we engage in convinces a fair number of people that since we can talk freely, not only are we still free to some extent, but since so many people are talking action must be just around to corner.

Which is precisely how the control system works. Subterfuge and self deception. This is why I constantly talk about looking within and finding the root of our problems. It all begins within. Know thyself and no one can ever control or manipulate you.

Cdad's picture

Brother Cog,

I hear you.  But I have an alcove, and I can sit and think.  And I have long understood that the actual catalyst for change in America, the new Marxist/Banker America, would be quite simple to achieve.  It begins simply by people not spending money on crap.  Yep, it begins like that.  People close their wallets.

No more $200 blue jeans.  No more Apple Icrap7's.  No more and larger flat screen TVs.  You get the point.  If Americans only spent on necessities, you would very quickly begin to see shifts in the power structure.  I am not suggesting that would end it, as certainly there would be entities that would continue to appeal to the money printers or the government deciders; however, that first move would reveal the cracks and demonstrate true power.

From there, I think it would be a matter of folks asserting State's Rights...coupled with some smart Constitutional Lawyers taking some very basic actions.  Slip in a federal bill that repeals Income Tax Withholding...and bingo.  Not a shot fired.

I suppose by confessing this to you, Brother Cog, our Big Brother may now get curious about his camera angle on my alcove...but I am not concerned about that because I am not manipulated or deceived or lost in the pixiedust subterfuge.  You see, I have sons and I know that they need a future, too.