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Goldman Revises Q1 GDP Estimate Higher To 3.7%, Sees Corresponding Future Weakness
Goldman's Jan Hatzius is now seeing a revised Q1 GDP, which will be announced this Friday, up from 3.2% (Goldman's estimate is 3.4%) to 3.7%. However, far from a good sign, this merely means that the imminent slow down is coming, and any gain in Q1 GDP over and above estimates, will result in a commensurate drop in Q2 and onward economic growth: As Hatzius points out: "Inventories are beginning to pile up at a rapid pace in the durable goods sector. These inventories rose 0.7% in April following increases of 0.6% and 0.7% in March and February, respectively. This is much faster than most companies will see as sustainable; hence some slowing in production is likely if recent - highly tentative - signs of abatement in orders (in the New York and Philadelphia Fed surveys) are at all indicative." Surely, this is nothing that a few extra trillion in QE or new fiscal stimulus can't fix, courtesy of the Central Committee.
Full report:
A Mixed Report, Implying Stronger Q1 but Softening in April
BOTTOM LINE: Not a simple report to analyze. On orders: (1) aircraft orders dominated in April, as we expected; (2) ex aircraft, net changes in April were weaker than most expected; and (3) large upward revisions to March provide a substantial offset to that news. Meanwhile, upward revisions to capital goods shipments imply a larger upward revision to first-quarter growth than we previously thought (to 3.7%); however, durable goods inventories piled up at a rapid pace for a third consecutive month.
KEY NUMBERS:
Durable goods orders +2.9% in Apr (mom, +21.6% yoy) vs. GS +4%, median forecast +1.3%.
Ex transportation -1.0% in Apr (mom, +23.4% yoy) vs. median forecast +0.5%.MAIN POINTS:
1. This report does not have a simple story to it. In April, the increase reported for durable goods orders was heavily skewed toward civilian aircraft, which have little impact on near-term production given the long lead times in that industry. Excluding transportation, the net change in orders was weaker than most anyone expected (the low for 44 forecasts was -1.5%). For other types of (nondefense) capital goods, orders fell 2.4% in April.
2. However, data for March were revised up substantially, especially for the nondefense capital goods other than aircraft. Whereas previously these orders were reported up 4.5% (as of the factory orders release for March), they are now up 6.5%; in addition, the gain in February was pushed up 0.2 points to +3.0%. So more than four-fifths of the loss in April is recovered in the base. Total durable goods orders were also revised to show no change in March vs. -0.6% previously.
3. Upward revisions to capital goods shipments in January and February have an important bearing on the upcoming revision to first-quarter real GDP growth, due Friday. As a result of those revisions, we now estimate that real GDP rose 3.7% at an annual rate vs. the posted figure of 3.2%. Our previous call for this revision was 3.4%.4. At the same time, inventories are beginning to pile up at a rapid pace in the durable goods sector. These inventories rose 0.7% in April following increases of 0.6% and 0.7% in March and February, respectively. This is much faster than most companies will see as sustainable; hence some slowing in production is likely if recent - highly tentative - signs of abatement in orders (in the New York and Philadelphia Fed surveys) are at all indicative.
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Even a Fed manufactured "correction" to instill confidence that everything is above board isn't doing the trick anymore. ("see we corrected, we corrected and it's above 10K again.. everybody in!")
Yes, but with all the unemployment people have a lot more time on their hands to go out and spend! With no mortgage payment, 99 weeks of unemployment and free food (stamps), more money for Best Buy!
70% of GDP is on fire!
Somebody's making a long bet on QE2 for Q3.
So how is this to read in comparison with
what came out yesterday:
CBO: Stimulus raised GDP 1.7% to 4.2% in Q1http://www.calculatedriskblog.com/2010/05/cbo-stimulus-raised-gdp-17-to-...
IF the current regime were out of the peoples house, the GDP would jump to 5, minimum.
Folks have a ton of cash sitting..........they will not BUY, until they see the damages to their stashes, that Obiewanomics is going to cause.
This is all by design, and wanted...............it is part of the master plan, we are not stupid.
A lot more people have paid off debt's, and saved than we are being shown..........if we had a admin, that wanted growth, and increases in GDP, we could get it fast............but, not with the draconian measures he has put in place.
Did anyone else notice the rebasement of the durable goods numbers for todays report...totally predicatable
Our government is in desperate need of cash...
Could Goldman be right this time?
you bet goldman is right as dc will cook numbers to that level to support their phony bull campaign - by the way the number is due on Thursday
What if this is another "Epic Headfake" to get Behind their clients by the Squid?
This stuff isn't confined to blogs anymore. I was listening to a popular Houston morning show that is syndicated along the Gulf Coast this morning. The hosts, Walton and Johnson, were openly talking about U.S. debt surpassing the 13T mark, saying that's roughly $170k in debt per citizen (dumbing it down for listeners by explaining that includes your kids). Went on to say that debt-to-GDP is running at 90%. So, these issues are definitely making their way into other media outlets.
Actually, it's $170K / household.
If we assume 300 million citizens, $13T comes to $ 43,000 each.
Using John King's numbers ($ 1T spread over US households results in a liability/household of $ 8500), that implies 3.92 people / household. I thought it was lower than that. Probably means that the $170,000 number is actually a bit low.
Tyler, the GDP number is due out tomorrow (Thursday)
So we have an inventory bounce, which happens after every recession.
Then we'll have another recession. Then another bounce.
Bouncy, bouncy, wheeeee this is fun!
From 1940 - 2009 (70 year span), the GDP has gone up 1275% (inflation adjusted, 2000 chain). In that same period, the Dow has gone up 705% (inflation adjusted, 2000 chain), for a grand total 570% delta between a supposedly representative sample of our national economy, and the alleged growth of our national economy. Food for thought as we get the GDP numbers tomorrow with the Dow zooming past 10K again on "better than expected" GDP growth.