It Begins: JPMorgan Lowers Q3 GDP

Tyler Durden's picture

By now it is no secret that Q2 GDP is a complete scratch, likely coming at under 2%, meaning that the economy contracted in real terms (even though back in January every Wall Street economist expected a 4% growth rate at this point). Needless to say, those who have been reading Zero Hedge know that Q3 and Q4 will suffer the same fate. Everyone else who has been holding out in hope that some mythical and mysterious car buying force will appear out of somewhere and can now relax. It isn't. Here is the first official Q3 GDP downgrade, courtesy of JPM's Michael Feroli. We fully expect every other clueless Wall Street lemming to follow suit in minutes.

Read em and weep:

We are revising down our projection for the growth rate of real GDP in Q3 from 3.0% to 2.5%. Obviously there's not a whole lot we know right now about third quarter growth, but one thing we do know is that the composition of second quarter growth implied a fairly large amount of inventory building, which should weigh some on output growth in the current quarter. Given the data was have through May it appears real inventories were built up last quarter at around a $65 billion annual rate; this is a fairly strong pace of stockbuilding even in a time of healthy final demand growth, but of course final demand growth has been quite soft as of late. The suspicion that the inventory building was unanticipated by business, and unwanted, receives some validation in the customers' inventories index in the June ISM survey, which reported an assessment that inventories were getting to flush levels.
We still expect that Q3 growth will be better than Q2 growth -- which is currently tracking a little to the soft side of our 2.0% estimate -- as we still see the two positives for Q3 largely intact: a rebound in vehicle production and a decline in energy prices freeing up some consumer purchasing power. To be sure, both of these positives are looking a little less shiny than they did a few weeks ago. Revised Ward's vehicle production schedules are still boomy, but less so than the previous estimate (CSM schedules will be released tomorrow), and the decline in retail gas prices seems to have stalled for now. Nonetheless, Q2 is a fairly low hurdle to cross, and we still believe that Q3 can beat the prior quarter's growth number.

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TruthInSunshine's picture

It's all good.

TARP, TALF, QE1, QE2, QE2.5 all had the obvious effect of creating high wage jobs by the tens of millions, helped get equity valuations back to true FMV, helped get bonds and treasuries back to true FMV, stoked strong and sustained consumer demand for goods and services, achieved optimum inflation stability, and rejuvenated real estate asset values.

So QE3 is a no brainer. Who would possibly not want to see it? Just make it much larger.

And hey, look -

Only 1.7 million additional homes have gone into foreclosure in JUST the first 6 months of 2011, but there would have been 2.7 million additional homes going into foreclosure in just these 6 months if it weren't for 'paperwork problems,' so, just like the debt, these foreclosures will keep being kicked like an oxidized can down the street, until there are 15 million (or more) homes in foreclosure, piled up, like steaming heaps of cow dung.

What great progress!


Foreclosure Glut Pushes Filings Into 2012

Mactheknife's picture

Obviously there's not a whole lot we know right now about third quarter growth,

Nuff said.

buzzsaw99's picture

Cut goobermint spending, that will be good for the gdp. lulz

CrashisOptimistic's picture

Don't cut it, and rates go up because no need for QE3, and GDP falls.

buzzsaw99's picture

everyone keeps saying "rates go up". i don't think it means what they think it means. lololololol

Jambo Mambo Bill's picture

Gold and silver pull back soon?

MFL8240's picture

Just a game unless you want confetti?

cougar_w's picture

Legalize pot.

Problem solved.


Cognitive Dissonance's picture

Are the sisters in agreement? How do they feel about their prey being stoned when consumed? Is there any pass through or other possible side effects? :)

cougar_w's picture

Diamond doesn't care about pot. Has no effect. And Fortran doesn't injest anything other than blood and she lacks a proper nervous system anyway.

However we do keep Diamond out of the licorice. My God, that woman, it's worse than catnip. You want to have a "nice time" with Diamond, buy her about three mugs of licorice spice tea and look out cuz it's eazy sleazy.

She claims it has no effect on her. Denial -- so ugly.

Dagny Taggart's picture

...and when does that chapter get published?

Cognitive Dissonance's picture


Don't corner the cougar if you want to keep your blood on the inside.

Just sayin'

Cognitive Dissonance's picture

Yes, our cougar_w is a very interesting author.....and a mad scientist to boot.

Please keep your hands and feet inside the car at all times. And thank you for playing the home version of The Zero Hedge Effect.

Iriestx's picture

I dunno, the Teleprompter-in-Chief said that the reefer is more dangerous than heroin.

Problem Is's picture

Reefer says the Teleprompter-in-Bitch is more dangerous than heroin...

carbonmutant's picture

There a lot of people in this State that agree with you...

And Jerry desperately needs the money...

Cognitive Dissonance's picture

Everyone else who has been holding out in hope that some mythical and mysterious car buying force will appear out of somewhere and can now relax.

I might not be in the market for a new car, but I've been putting off replacing the water pump in the old jalopy. If I changed that sucker would that help out?

cougar_w's picture

For the love of God YES!!1! Do it man!

Oh and the air filter too while you have the hood up. Everything helps.

Threeggg's picture

While you have that waterpump off do yourself a favor and change the timing chain.

All steel no Teflon .........................

gmrpeabody's picture


And since they had to pull the front and top half of the engine, you might as well replace that thermostat and all the fittings. That should get you close to the $1500 min charge at most dealer service depts.

Oh ya... and have them replace the plugs while they are exposed, or face taking that engine apart again in 2 years.

Be sure to pop the hood and make sure they tightened the radiator cap back down BEFORE you drive that expensive repair home (jump you f--kers). 

Abitdodgie's picture

Careful with HOT particles in the air filter

Josh Randall's picture

I thought eating peas was the key to this whole mess, what am I missing ? 

Cognitive Dissonance's picture

Peas were yesterday. Water pumps are today.

Keep up fool.

Problem Is's picture

Mr. T says chain sawin' trees in rich white folk's neighborhood be today... fool...

Cognitive Dissonance's picture

The papers called it the 'Lake Forest Chainsaw Massacre.' Arborists were stunned.

Problem Is's picture

Classic T pissing off Obummer's future benefactors...

Cognitive Dissonance's picture

A Chicago native no less.

Of course he never really was one of 'them' because he didn't come into his money honestly (meaning he didn't steal it) but rather earned it by being a TV star.

Yuck! How pedestrian. And all that Gold and stuff. The horror.

TruthInSunshine's picture

Cognitive Dissonance, you must buy a new General Motors vehicle within 30 days from 7-14-2011.

If not, you will be targeted for elimination.

***This is an automatic relay of DHS Insta-Alert Directive sent to all known contacts of suspected emerging rebel leader 'Cognitive Dissonance', garnered through Program Ping-Loop-Triangulate. Please forward to suspected emerging rebel leader Congitive Dissonance immediately***

Cognitive Dissonance's picture

Now that's creepy.

You can have my loan signature when you forge it from my cold dead fingers. Good luck getting the loan paid then.

Oh wait, that's right. You don't care about repayment.

Problem Is's picture

Jalopy repairs... Sunk cost, remember?

Wait for Barry Soetoro's new, Stevie "The Rat" Rattner stock boostin', shovel ready stimulus project... drum roll please...

Cash4Clunkers II...

Coming to an inventory stuffed and overstocked GM dealer near you...

fuu's picture

I just replaced the two tanks on my truck. Bought 'em through Amazon too so that should have helped GDP some what.

cougar_w's picture


A real 'Merican would have just gone out and bought two trucks.

Dr. Richard Head's picture

...on their credit card or through a HELOC. Perhaps a loan from their 401K? 

My wife is turning tricks to keep bread on the table.  At least that is what she told me.

Cognitive Dissonance's picture

As long as the money keeps coming in don't ask too many questions.

fuu's picture

Damn got it wrong again.

slewie the pi-rat's picture

yeah.  didn't you mean to say you replaced yer truck w/ two tanks, fuu? 

Cognitive Dissonance's picture

China is currently in an upgrade cycle so there are some great used deals out there.

Cognitive Dissonance's picture

Not only do they come fully loaded (GPS Nav not included, but all the high velocity rounds you want) but they will be delivered to any major port on the East or West Coast of America no extra charge.

Don't worry about Homeland Security halting the shipment. They are too busy groping Grandma to care about a few used tanks.

foxmuldar's picture

I bet Holder can sell a few of them to the drug cartels. Just add them to the Fast and Furious program. Then blame it on the local gun shops.

foxmuldar's picture

Can I get one in red, with blue stars?

carbonmutant's picture

Auto parts sounds like a good equities play..