It Starts: JPM Cuts Q1 GDP Forecast From 4% To 3.5%, Sees CPI Growing At 4%

Tyler Durden's picture

And so the sunset of the QE2 inspired Golden Age begins: From JPM's Michael Ferolli: "We are revising down our projection for the annual growth rate of real GDP in Q1 from 4.0% to 3.5%. Prior to this week, first quarter growth had already been tracking a little soft relative to our forecast. In particular, consumers stumbled a bit to start the year, and while we expect them to pick up the pace some in coming months, the recent rise in energy prices poses a notable headwind. Most cyclical indicators remain quite favorable, and the unwind of adverse weather effects could support next quarter growth; for these reasons we are maintaining our second quarter growth forecast of 4%. If energy prices remain at their elevated level, however, this would pose a challenge to our outlook for next quarter. Another downside risk to Q2 GDP growth comes from the federal government sector, which could see a faster move to austerity than is in our current forecast. We've also revised our headline CPI forecast, particularly in Q1 where we now see the CPI increasing at a 4% annual rate. Below is our updated forecast spreadsheet."

Look for everyone else to jump on the downgrade bandwagon (fully confirmed when that Deutsche Bank excuse of an economic strategist starts turning bearish) as we have been expecting since January, and once Goldman gets in, and Bill Dudley passes the message from Hatzius to his Sith master (not to mention Hilsenrath), watch for the QE3 "rumors" to go ballistic.

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TheEmperor's picture

All according to my plan

johnQpublic's picture

QE (wheres my infinity key) imminent

Cash_is_Trash's picture


There you are.

QE ad inifinitum

Carl Spackler's picture

"Emperor, your feeble skills are no match for the power of quantitative easing 3, 4, and 5"

                                                       - Ben Bernanke

Gerolsteiner's picture

The usage of the word "ballistic" by editors is a little inflationary on here.

gordengeko's picture

Let us not forget, futures delivery for silver in March and oh, something about a small little, peaceful Saudi demonstration set for March 11th.  Prob no big deal.

johnQpublic's picture

march 20th



and blue star....

Cognitive Dissonance's picture

The herd begins to change direction.........just in time to "validate" the need for QE 3.+

The Potomac two step under the DC Cherry blossoms will be spectacular this year.

sulfur's picture

when will the sheeple finally realize economy is not about growth but about allocation of ressources.....cant wait for exploding consumer prices so chairsatan can burn in hell

philgramm's picture

JPM admitting that economy slowing down and rising inflation?  Then why don't you stop printing money you fuckos!!!!!

Sean7k's picture

I'm not sure why we need forecasts anymore. As long as you have QE, it is merely a matter of identifying areas of allocation(equities) and then inflation factors which mop up the excess from shadow banking. Sigh.

Milton Waddams's picture

Tool alert: "unwind of adverse weather effects could support next quarter growth"

sunny's picture

I'm missing something here.  US 4th quarter GDP down, GDP down in England as well.  Both markets are moving seriously up.  The lower the GDP, the better the market performance???  WTF????  The new normal???


dark pools of soros's picture

market trading is ran by computers..   consumption isn't there yet


at some point your purchases will be done automatically like those auto bill payments.


netnil's picture

QE3 .... long live the QuEens

Robslob's picture

With QE3 on the horizon why isn't silver escalating to the heavens?

Quaderratic Probing's picture

Because there is no real silver to buy only paper silver

papaswamp's picture

Speaking of weather....with some decent solar input, the south could be due for a wicked Hurricane season. The previous predictions have been way off, but recent solar activity may inject enough energy to make for a wild ride. 

johnQpublic's picture

warming of anything is not caused by the sun....its caused by al gore....all that hot air...

buchesky's picture

Yes, higher commodity prices are a factor, but the real driver, of course, was the snow...

Lionhead's picture

These bank & FED economists are tiring. They "model," they forecast, they revise, they change their models. They are consistently wrong as they are biased for a better than average result. I suggest to these "modelers" they buy a Lionel train set for their basements where they can "model" to their hearts content without inflecting pain on all the rest of us.

Model railroading is an excellent new profession for them. They can build "empires" of cities, factories, transportation networks to enact the pipe dreams contained in their heads. Bernanke can convene conventions for all the "modelers" to show off their handy work & we can be rid of their Keynesian fantasies once & for all.

Think of the savings we can have by just buying the toddlers a train set choo-choo.

JR's picture

From Nathan’s Economic Edge Morning Update/Market Thread/2/25


“The first revision for Q4 GDP came out much weaker, falling from the previously contrived number of 3.2% to the still ridiculous 2.8% ‘growth.’ This comes on expectations that it would be revised upwards to 3.4%.  The weakness is in exactly the areas I pointed to when this report first came out – but let’s face it, this report is overstated by huge amounts – I’m guessing our actual GDP is 40% (or more) less than what we spin to the world.  Keep in mind that as the quantity of money grows, the GDP APPEARS to grow, but that does not mean that we are actually producing more goods and services…

“To me this report (the Econoday) is just a flat out lie.  It is disinformation on behalf of private banks.  The disinformation in economics has become so extreme that it’s just embarrassing – fraud is everywhere you look.  In the case of GDP, we let financial engineers create phony paper and debt, and we count that as today’s production.  But the truth is that debt should be subtracted from GDP because it is an obligation, and ‘production’ based upon it is borrowed from the future.  Also, the GDP deflator vastly understates inflation which overstates productivity. And so the spin by manipulating this number leads people to believe that we are more productive than we actually are.

And that makes the disinformation nothing more than a marketing tool to convince people to borrow and spend even more. The result is massive misallocation of resources.  Phony GDP reporting is just one level of disinformation; it permeates all of our economy…

“Every aspect of our society is now permeated with this false façade of marketing…”

tellsometruth's picture

talk is cheap, and pres O loves saying one thing and doing another...seems like something in common with cozy wall st, no?

from politico article about William Dailey becoming WH chief of staff:

. He’s a former commerce secretary, who headed up President Bill Clinton’s effort to enact the historic NAFTA treaty, served as chairman of Vice President Al Gore’s presidential campaign in 2000, and happens to be a member of a storied political dynasty in Obama’s hometown of Chicago.

Read more:


JR's picture

And, he is making millions from some of his investments.

Which is nothing of what he will be worth after he takes care of favors that the Obama Administration can bestow.

Bloomberg (February 18, 2011) -- William Daley, President Barack Obama’s chief of staff, held investments including stocks and cash accounts worth between $7.3 million and $49.7 million, according to federal disclosure forms released by the White House.

Daley also cashed out a non-qualified pension plan at JPMorgan as a lump sum, valued at $6.6 million, the disclosure shows…

The 43-page document also shows Daley, 62, received $8.7 million in salary and stock and cash bonuses in 2010 and the first week of 2011 while working at JPMorgan Chase & Co., where he was Midwest chairman and head of corporate responsibility before becoming Obama’s top aide in January.

The appointment of Daley by Obama, like so many others, demonstrates again that it is not the president who is doing the appointing, it is the appointed (like the other investment bankers) that select and manage the President of the United States.

txapela's picture

delete post please.

PulauHantu29's picture

Hogwash. Banks buying banks...fed printing and handing money to's all going round and round creating massive Bonuses at the top and nothing at the Middle and Bottom.

Josh Randall's picture

"consumers stumbled a bit to start the year" -- these people disgust me - hard not to stumble when you have looted everything and manipulate the market. The JPMorgue needs to rot

SheepDog-One's picture

Lets see, 2 QE's have proven to have been total failure face-plants, I guess the answer is another QE mainline which will surely work this time! 3rd time's the charm....yea whatever.

gwar5's picture

Casualty of the silver war?

Little surreal the central banks are making record profits and bonuses during "Worst economic crises since the Great Depression."

earnulf's picture

That "revision" also guaranteed that the National Debt will exceed the GDP by the end of fiscal 2011.    The drop knocked off about 100 billion dollars from the 2011 GDP figure, putting the estimate for 2011 around 15.12 Trillion and the debt should finish the year at 15.20 Trillion.

In Ponzi We Trust's picture

I have been keeping track of my household expenses since 2009 and comparing it to the official CPI numbers, and I can tell you the CPI way understates the true cost of living.  For 2010, the CPI was 1.5%, while my "personal CPI" (PCPI) was 8.38%.  So far in 2011, my overall PCPI has risen 2.4%, which would be about 15% annualized.  So even JPM is behind the curve on this.  If anyone is interested, I have posted my inflation numbers at

topcallingtroll's picture

Your numbers are ridiculous without you personal price deflater, hedonic adjustments and owner equivalent rent.

Besides you are just one number that goes into the average personal price inflation. We need a stratified random sample of people keeping track of expenditures just like you are doing. Somebody might make money producing this metric

JR's picture

I have taken the liberty of reposting your comment on ZH’s blue thread: The Impact of Surging Oil Prices on the US Consumer: A Primer.

I wish to state…that I really value non-manipulated numbers.  After all, inflation is something that citizens experience; too long it has been a code word for government marketing cover-up.  How can any citizen understand and compare his inflation term after it has been processed like a sausage: massaged, manipulated, and flavored with “real” and “nominal” and “hedonics” and sold in an opaque package by a duplicitous media and prostitute economists.

Thanks for your grassroots information: I will be checking in from time to time.

topcallingtroll's picture

Wow. The race between core and real gdp is going to tighten up.

Bansters-in-my- feces's picture

I bought more Silver yesterday to add to the big SilverDildo I'm making to help fuck JPM (Blythe) up the A$$ good.


Just doing my share.Just doing whats right.!

FoieGras's picture

If nominal GDP was to grow at 8% annualized consistently that would be a tremendous success. Total Debt/GDP would revert back to historical norms within 10-12 years. I fear all this is a pipedream though.

glenlloyd's picture

I don't believe the consumer stumbled so much as the consumer is retrenching, and permanently.

Besides, these things are all revised lower repeatedly. It's only the first release that anyone pays any attention to, not the revisions, so even if they do lie on the first release they revise it down to semi-lie later on.

8% GDP annualized is a pipedream.