Goldman On GDP And Surging Claims: Expect "Softer Nonfarm Payroll Growth In April Than March"

Tyler Durden's picture

Not at all surprising, Goldman's economic team continues to (pretend) it is in denial, knowing full well the second it downgrades its Q2 and H2 numbers it is game over. As such its "review" of the ugly Q1 GDP number came out smelling like rainbows and unicorns, namely "this mix of growth - stronger consumption and less inventory building - suggests a bit more momentum heading into Q2." Let's see how this mix is revised in the second and of course third GDP revision. However, where Goldman gets ominous, is its observation of next month's NFP number. If Hatzius is correct (and with his 1.75% Q1 GDP he was the closest of all to the real number), look for the nonfarm payroll number to be beyond ugly, fully opening the door for further QEasing.

From Goldman Sachs


1.Real GDP increased by 1.8% (qoq annualized) in Q1, close to our and consensus forecasts. However, the composition of the increase was slightly more favorable than expected. Most importantly, consumer spending increased by 2.7%. While down from 4.0% growth in Q4, this was well-above the consensus estimate of a 2.0% gain. In contrast, inventory investment was slightly weaker than we had thought. This mix of growth - stronger consumption and less inventory building - suggests a bit more momentum heading into Q2.

2. Other components of GDP were broadly in line with expectations. Growth in business fixed investment (capex) cooled, adding just 0.2pp to overall growth after adding 0.7pp in Q4. Firms actually purchased more equipment and software, but this was offset by a sharp decline in investment in structures. Residential investment was also a modest drag on growth (of about 0.1pp). Net trade subtracted 0.1pp from GDP growth after adding 3.3pp in Q4. This swing mostly reflected stronger imports.

3. Inflation news in the report was mixed. The overall GDP deflator increased by 1.9%, less than the consensus forecast of a 2.3% gain. However, the core PCE deflator increased by 1.5%, more than we and the consensus had forecast.

4. Separately, initial jobless claims climbed to 429k in the week ending April 23, and are now clearly above average levels for February and March. Although technical factors could be adding some noise (e.g. the Easter holiday), we now think the persistent rise indicates an actual in increase in filing activity. Overall, the latest claims reports may point to softer nonfarm payroll growth in April than March.

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oogs66's picture

even the Easter bunny takes blame for no jobs

lolmao500's picture

Eh Goldman, stop the 12% of GDP in deficit spending, factor in dollar devaluation (-10% since January 4) and inflation in commodities (from several dozens % to hundreds of %) and see what happens to your ``1.8% growth`` BS... ah yes, it would drop below -12%...

SheepDog-One's picture

The last act of every failed nation is printing its own currency to oblivion, monetizing the debt. We've been doing that for over 2 years now.

Henry Chinaski's picture

...and everyone can see the results.  TPTB are losing control.  Well they really never had control, but the farce is being exposed and can't go on forever.

Chuck Walla's picture

"Paper money eventually returns to its intrinsic value – Zero,” ~ Voltaire 1729

Mistral or Zephyr's picture

2 years?!?! 

Try the last 10-12. 

TruthInSunshine's picture

Bernanke's solutions to the most critical issue, job(lessness) growth, is such an epic and expensive and inefficient failure, he's about to double down?

Say it isn't so.

SheepDog-One's picture

Goldman sugar coaters just trying to look at the terminal chemo patient, saying he looks 'better than they expected', and therefore is about to pop up and win the Boston Marathon. Just not gonna happen.

Misean's picture

Consumers are spending more but getting less as prices rise driving down inventory build incentives. This is supposedly good for the economy going forward.

In other news, the plane, which had slowed to conserve fuel, is now thankfully accelerating, as it has run out of fuel and its wings fell off.

SheepDog-One's picture

Yes that about sums it up.

TheRagingBull's picture


Rosie turns bullish, oh wait, on technical front.

“On a very near-term basis, and despite my long-standing macro concern list, which has not gone away, it does look like the market is set to rise further.  The technicals are suggesting as much, though I do await what Walter Murphy may have to say on the matter.  I had said before that a breakout to new highs led by higher volume would be an important technical signpost.  Well, we achieved that Holy Grail yesterday – both in level terms and with respect to the change.  This is not throwing in the towel, it is an acknowledgment of what the market internals are flashing at the current time from a purely tactical and technical standpoint….

…All that said, we had a breakout to new highs yesterday and this time, the volume rose on the major exchanges, not to mention rising above the 50 DMA on the Nasdaq, which is a clear sign that the big boys are putting money to work.  This market continues to impressively climb a wall of worry.  Market internals are too strong to ignore right now – the NYSE advancers beat decliners by a 3 to 1 ratio yesterday; the Dow transports soared 1.9%; and the small caps beat their major benchmarks.  My overall macro concerns have not gone away, but these market facts on the ground are tough to ignore.”


Source: Gluskin Sheff

SheepDog-One's picture

'Market looks like it will rise further'...well so what? Dollar is set to drop further, anyone hoping to get dollar gains by riding stocks up the down escalator has a WAY stronger gambling stomach than I do! Screw stocks!

TheRagingBull's picture

Last bear to throw in the towels, what would be the worst scenario for chairsatan? declining stock price on weaker dollars, we are all screwed.

SheepDog-One's picture

I hear that, the last bear has turned bull, and buying the top. Well good luck to him, he'll need it!

oogs66's picture

I would feel bad for him if he basically just called the top :(

Johnny Lawrence's picture

He said technically the market looks like it's going up in the short-term.  Not exactly throwing in the towel.  Technically the market does look good in the short-term.  It's above all support levels.

lolmao500's picture

And today's bond selling auction will make the US break the debt ceiling.


To the moon I tell ya.

Racer's picture

And what about that bloomberg consumer comfort figure out half an hour ago! Wow...

bet that will be shoved under the carpet

SheepDog-One's picture

That carpet theyve been sweeping everything under now resembles a postage stamp on an elephants back!

foxman's picture

The CAI will beat.

Misean's picture

It's arbitrarily designed to...

Cassandra Syndrome's picture

I see Silver is getting very frisky again.

Milton Waddams's picture

No worries, a 2% inflation tax will certainly solve all the problems.  The value of the money, while in the hands of the master's of the universe, will certainly multiply and trickle down to... domestic servants.

Village Smithy's picture

How much of that consumer spending increase can be attributed to the "squatter phenomenon"? As far as I am concerned almost every cent of that found money goes right down the street to the mall. Just as an aside I wanted to look one of those references up in the ZH archives but I can't seem to find the search tool anymore.

franzpick's picture

It's between $50-100 BIL, or .5 to .75% of PCE, and I have yet to see any decent analysis.

Just a WAG: If there are 7 Mil 'stay-ins'/squatters/home-sharers not paying on an average loan balance of say, $150K (call that $900/Mo.) and not paying, say, 2% RE tax on average value of $180K ($3600/12=$300/mo.), the PMI/RE tax "saving" available for mall spending could be $1200/mo. X 7 Mil., or $8 BILLION/mo., maybe $100 BIL/yr., a big number.

Developing credit-collapse metrics such as this is a 3rd rail killer for conventional analysts, but if you're not looking for it, you won't see the coming trouble.


Village Smithy's picture

Thanks so much for digging that up. I hadn't even thought of the property tax savings as well. Unfortunately, these folks still have to pay utilities, at least for now (sarcasm off). Imagine what the number could be if these people instead of paying cash at the Apple Store are maxing out credit cards and just using the squatter's rent to pay the minimums. That's a lot of retail leverage. Somehow, as large as this number is at its minimum, it is still not deemed newsworthy. I can't imagine, and I've spent too much time trying, how all this stuff is going to unwind. Thanks again for your reply.

firstdivision's picture

Gee...what a surprise...another decline into summer.  QE to infinity and beyond. Get positioned for QE3 in t-minus 4 months.

topcallingtroll's picture

I have been saying sell in may and go away, but does anyone ever listen to a troll?

monopoly's picture

Soon, it will be pollen season. That is a good reason for less jobs. This is beyond words guys.

Johnny Lawrence's picture

Silver futures up 7%.  Dear lord.

AbbeBrel's picture

Doctor $COPPER has been bouncing on its support for a while, and in a declining trend.   If it breaks through $4, it seems like this is as good an indication as any that BRIC growth is slowing.   The next major chart support is at $3...   It is for sure that home building in the Good 'ol USA won't supply much demand in the foreseeable future!

topcallingtroll's picture


Of all the brics brazil is the most open and economically enlightened. A young vigorous and growing population and huge natural resources.

It is the super bric of the bunch and has a gov debt to gdp ratio less than 0.40

It is also gonna get a little bit of fiscal stimulus on the buildup to the olympics.

The mortgage market is virtually non existent. No one has any leverage (debt). With a nice dividend that will grow and a dollar diversifier I hope to be banging that hot bitch a long time.

I put brazil into my long term investment funds with ewz. I am holding it until the olympics then re asses.

SoNH80's picture

Brazil.... yeah.... a mixed bag for sure, let's call it.  They kill homeless children there, not a place where I'd want to put my money.  The elite there is a bunch of pompous arrogant pricks, just like the U.S.'s, that likes nothing more than to steal foreigners' money....

topcallingtroll's picture

The race is tightening up between real GDP and core inflation.

The core inflation horse has been steadily closing the gap. Real GDP is looking a little tired around the second turn. Stay in your seats boyz and girlz! It is about to get exciting again!

Milton Waddams's picture

The Rentenmark replaced the German Deutsche Mark. Due to the economic crises in Germany after World War I, there was no gold available to back the currency. Therefore the Rentenbank, which issued the Rentenmark, mortgaged land and industrial goods worth 3.2 billion Rentenmark to back the new currency. The Rentenmark was introduced at a rate 1 Rentenmark = 1012 Deutsche Mark, establishing an exchange rate of 1 United States dollar = 4.2 RM.

Johnny Lawrence's picture

Here's the latest propoganda piece from UBS:

It remains our view that the expansion is on track and that risk assets are still positioned to broadly outperform. Equity markets are still trading at undemanding valuation levels and earnings season is shaping up better than we expected.

SoNH80's picture

The labor market is softer than Paul O'Neill's erect prick.

Racer's picture

And along with that consumer comfort news, just look at that kansas city fed..but hey who dollars for the rich to go play on the markets..

Dick Darlington's picture

Yep, free federal reserve confetti is the only thing that matters these days. Data coming out today has been soft but noone cares. Instead you see headlines like this:

04-28 11:07: Talk in the Pit of Algorithmic Buy Program started in S&P E-Mini Futures These are weird times...
Dick Darlington's picture

Kansas City Fed Manufacturing survey joins the other regional surveys in the nose dive.

oogs66's picture

funny how this hasn't been trumpeted by CNBS

Hephasteus's picture

Jobs. Here's 40,000 of them going away being presented as 17,000

The truth. You can't HANDLE the truth.