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GDP Second Revision At 1.8% On Expectations Of 2.2%, Sub 1% Ex-Inventory Build; Initial Claims Surge To 424K
Contrary to expectations by the endlessly wrong Wall Street crew, the second revision of Q1 GDP came not as expected at 2.2% (up from 1.8% in the first estimate), but far, far lower at 1.8%. And while the number is largely irrelevant for the future and even current economy, it shows that the contraction is far more pronounced. More troubling is the shift in various GDP components contributing to the number: the biggest delta was Personal Consumption Expenditures which missed by a whopping 21%, plunging from 2.7% to 2.2%, on expectations of a rise to 2.8%. As a result as the chart below shows, the "growth" in Q1 was based on even shakier grounds: the contribution from PCE plunged from 1.91% to 1.16%, with Fixed Investment plunging from 0.93% to 0.26%. The plug: why old faithful of course - Inventories, which "added" 1.19% to growth, up from 0.09% in the first revision. Ex the now traditional inventory build, Q1 GDP growth was sub 1%. Which means that once the inevitable liquidations commence, the US will go into all out contraction. And confirming the keyword of 2011 "stagflation" is now firmly entrenched, was the BLS advising us that initial claims surged from 404K to 424K. So much for no QE3. Next up, as we have said ever since January, Jan Hatzius and Bill Dudley start having tete-a-tetes. Everyone knows what follows...
Charting the troubling shift in GDP components:
From the truly ugly BEA report:
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.8 percent in the first quarter of 2011, (that is, from the fourth quarter to the first quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 3.1 percent.
The deceleration in real GDP in the first quarter primarily reflected a sharp upturn in imports, a deceleration in PCE, a larger decrease in federal government spending, and a deceleration in nonresidential fixed investment that were partly offset by a sharp upturn in private inventory investment.
Motor vehicle output added 1.28 percentage points to the first-quarter change in real GDP after subtracting 0.27 percentage point from the fourth-quarter change. Final sales of computers added 0.06 percentage point to the first-quarter change in real GDP after adding 0.35 percentage point to the fourthquarter change.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 3.8 percent in the first quarter, unrevised from the advance estimate; this index increased 2.1 percent in the fourth quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 2.2 percent in the first quarter, compared with an increase of 1.1 percent in the fourth.
Real personal consumption expenditures increased 2.2 percent in the first quarter, compared with an increase of 4.0 percent in the fourth. Durable goods increased 8.9 percent, compared with an increase of 21.1 percent. Nondurable goods increased 1.1 percent, compared with an increase of 4.1 percent. Services increased 1.5 percent, the same increase as in the fourth.
Real final sales of domestic product -- GDP less change in private inventories -- increased 0.6 percent in the first quarter, compared with an increase of 6.7 percent in the fourth.
And from the Initial Claims report:
In the week ending May 21, the advance figure for
seasonally adjusted initial claims was 424,000, an increase of 10,000 from
the previous week's revised figure of 414,000. The 4-week moving average was
438,500, a decrease of 1,750 from the previous week's revised average of
440,250.
The 99 week cliff is affected ever more people: 63K dropped off EUCs and Extended Benefits.
Summarizing it all: Stagflation.
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Fucking HUGE miss there...even Liesman had trouble explaining this one away. So, look for the Dow to be +35 or so by the time Strategy Session kicks off at noon.
THANKS GOD YOU DID NOT MENTION THE UPWARD REVISIONS ANYMORE
LOL, was thinking the same thing!
Osama, Schwarzie, Volcanos....take your pick, Steve!
at least we can rely on the honesty of th Bureau of Lying Statistics to be perpetually full of crap when it comes to the economy.
its a recovery on Htrae
The U.S. is, even by its own reported data (and with some adjustment to reflect a more pure form of reality - i.e. appreciating inventories for what they are in relation to GDP 'growth') is 0.9% away from economic contraction.
Way to save the day, Bernanke, Paulson, Geithner...
That's some seriously efficient large cash that you expended, and we're so glad to see the fruits of your impecable mental masturbations now blooming.
You saved the economy. You did it, guys. And now we can all rest easy knowing that the increase in the debt and quality of the Fed's and its member banks' balance sheets are that much healthier, too!
/s
Stagflation with an extra trillion or two dollars every year.....
Looks more like a depression...
It's both!
Two mints in one.
That is hilarious.
Nice Avatar.
The entire Fed program has been to fight off nominal deflation until hopefully growth appears. If the world economy continues to weaken, that effort will appear useless, and deflation will be preferable to an endless burn. Letting investors and businesses get ready for the deflation if they bother to pay attention wasn't a bad idea. Depression is still more likely than a boom. At best moderate inflation will be enough to hide the reality of real but slow declines in asset values and wages. Slight errors could blow the thing sky-high, of course.
Should be good for 50 pts.
So the bots will interpret this as positive...S&P 1450 here we come!
Personal consumption much weaker. Has to be good for retailers, right? More to spend now this quarter? Insane.
Absolutely. REITs will hit a new 52 week high today as they do virtually every day.
Why they can lay off thousands now...think of the money they'll save!
(like a speedfreak talking up weight-loss as a feature of their booty bump habit)
That's actually a great example. The next time I hear a CEO, one of the MSM, or Politicos pimping the economy, I'll be seeing a Meth head talking about how easily they've trimmed down. Sure it'll kill them in the end; but just look at how easy it was to lose 50 lbs.
...and of course the weight loss is temporary. But the addiction will most likely be endless. Short term gains at long term expense. Great match.
Um.....Glass(not that kind)-Steagall
The "market" loves it. REITs love it even more premarket.
It's just so damn believable.
I'm not gonna spin it, you spin it.
I'm not gonna spin it.
I've got an idea, let's get Timmy. He'll spin anything.
+1
He likes it! Hey Timmy!
QE III + QE IV here we come!
Yep. Wouldn't want to shock the monkey.
http://www.youtube.com/watch?v=bo9riZYUpTw
Green day to follow on wall street. After all, when the money's free...
Ha. IBM made its contribution to the job bleeding this week. It started its annual 'Job Offshoring Program' -- to be PC, they call them "Resource Actions". They typically layoff 10-15,000 US workers and ship the jobs to India, China and Brazil.
Same reaction as usual to horrid economic reports:
- Gold down
- Silver down
- Tiffany's up $2.50, new record highs
- Guess up $5 on blowout earnings
- Priceline over $500 again
- Another new record high for NFLX
- Treasuries rallying again, ignoring debt ceiling
Market continues to shrug off bad news and climbs the wall of worry.
Gold has been holding up extremely well lately...contrary to what you and Math Man claimed was "coming"-the "surge in volatility" in gold. Hasn't happened yet. I'd say we get to 1600 before we see any real volatility. Even then, a few $30-50 down days here and there isn't the end of the world-just another chance to load up before we take out $2k and beyond.
Well said. For someone who believes in the IBD system, Robo is very selective in what he highlights. Anyone who follows the IBD system would see that gold looks very good technically right now.
Gold just under record levels. Tells you that profits from commerce or stock trading are evaporating in the face of inflation in the cost of living, working and doing business.
Yeah, unlike most others I actually gave Math Man and Robo a chance to prove themselves without any bias. Not sure why I did that. They simply highlight the positives just like the idiots on the blowhorn. Any time silver is way up where are they? Any time the big momo names are down, where is Robo? Eating a fucking Big Mac?
Bottom line-Qe3, 4, 5, 6 ARE coming, gold and silver FTMFW.
Everybody gave them a chance. Multiple chances even. Just because you didn't witness it doesn't mean it didn't happen.
Its very easy for MomoFader, every day he just gets a new piece of paper and writes down his new 'portfolio of trusty stalwarts' after searching for whatever happens to be up.
Ya, hell of a wall its climed in last 3 months, almost 4
high wall i guess
BOZO
Participating in the Charlie Sheen Economy (tm), gargling with Courvoisier, and wiping your ass with "ins" won't fix the core economy, Robo.
Keep those Tiffany bobbits safe...we'll be back for 'em later.
Gold and silver fell in Europe long before this report. Futures are at +2, Come on Robo, that is just sloppy.
Robot, you are an absolute idiiot. Where were your posts as gold moved 45 dollars higher, silver up 4 dollars, PCLN down 30 points, NFLX deals with 15.00 dollar sales which would work well in a depression. How come you never post anything about China frauds.
Where were you when LNKD blew up from 122 to 86. What planet are you on?
Tyler, where is the Goddamn ignore button.
Seriously, I am tired of the constant junk posted by him. At least before he was putting up some skimply clad models but not anymore. Looks like someone got to him and he found religion.
'Personal consumption MUCH weaker'? RainbowTrader? But you said the market is pricing in the obviously robust consumer consumefest? So what now?
Yep....all will be well in mo-mo land until all of a sudden is isn't.
There is gonna be a massacre in the stock and bond markets at some point. Anyone who is counting this to continue had better hope Ben will give you another dub-sack of "QE" so that hot money, drug-addicted stock-market levitation can continue just a while longer...
The only problem is that the 2 rounds of QE (and any other money-injection games they play) have only made the up-slope on this roller coaster higher and steeper. At some point though....gravity (or reality) is going to take hold and going to pull this whole train over the top...and onto the down slope. Once that happens, it will not take long to reach a terminal velocity....Think you are smart enough to time it just right? Will you be able to jump off the train at the top? Are you going to be able to liquidate quicker than the HFT robots? IF not....you might want to consider taking all of the profits you have made in this faux-economy and buy yourself some tangible assets. Land, gold, food, ammuntion as well as getting yourself out of debt completely.
Or...maybe I am just a paranoid freak. Maybe I should just realize that our stock market is going up as a reflection of the progress and growth we have made ....financially, economically, politically, and socially.
Afterall...the economy is getting better right? Jobs are getting beter, right? The banking and financial casino has been closed down and the problems fixed...right? And Facebook really is worth half a billion dollars.....
You're right...all is well here...I am going all in on Priceline, Netflix and Linked-In...and may sell all my physical metals for a bunch of shares of GM and Citibank....UP UP AND AWAY TO A BRAVE NEW TOMORROW!!
ZOMG teh goleds are down $6
From Fed speak earlier in the month...commenting on the only way easing would turn into tightening is if GDP were to grow beyond expected levels.
Or in other words, more QE in the form of <enter here>....
Poor Robo...still looking at the paper price of gold are you...lmao...
from the 2 year old news this morning about the 0.01% loans...they are doing it today..and we will not hear about it until another two years goes by......but in my opinion..it will be over by then...QE whatever....it disgusts me to read this kind of crap...I was taught right and wrong....this is wrong..very wrong....
Rally!
More commentary, or more stagflation :)
Dow futures still +2.
GM, and another piece to this 1,000 piece puzzle falls into place. Said it a dozen times, gonna take a while but the pieces are slowly filling in.
Still not shorting this market.
Wait till Barama gets home...he's gonna be mad.
Private investment is at 0.23%, that is the compionent that drives recoveries and its non existant.
Government can solve that problem.
Tax away all investment capital and spend it on increased public employee union dues to pay for more campaign finance so that Congress will have more members willing to tax more and spend more on public employee ...
the fed can't be troubled to keep track of a mere $80B here or there.
I wonder how negative GDP would be if they used a Deflator that bore even a passing resemblance to reality? -2%? -3% maybe?
My thinking exactly: "Ex the now traditional inventory build, Q1 GDP growth was sub 1%. Which means that once the inevitable liquidations commence, the US will go into all out contraction."
We all know what the deflator they use is and that it is well below real inflation, you only need to juice their absurd number by less than 1% and we already are contracting. But if the real GDP was deflated by real inflation my bet is that it shrinking faster than my dick upon seeing my Ex mother-in-law in a bikini. Now imagine what would happen to commodities if there was real organic demand in the mix.
The only thing that is important on a macro level is that real GDP must not lose the race to core inflation.
They are running close now, but core inflation is looking even more exhausted.
This presupposes that 'Core Inflation' as calculated by the Fed means anything outside the fantasyland of Princeton Phd economists, and is not simply a goalseeked number produced by selectively including/excluding/hedonically adjusting anything that might cause the final figure to deviate from target.
I'm confused. Why didn't futures surge? Isn't this good news for QE3?
Who can tell? This isn't a real market, after all. Call it POMO, stealth goosing, or whatever.
I just hold real things (not paper), cause at some point the manipulation will reach a limit.
If only I knew when...
Yup, what a disaster. Gold is down $2.00 and silver down .45 cents. There go all my profits from 800 and 25 for silver. Oh wait, I still have a small profit.
These morons bashing gold, silver make me want to puke.
Modest prediciton: gold will finish higher
Great, we really were having a stagflation during Q1. It kind of had that overall feel about it. But, I think that will be reversed into a real contraction come the end of June. Guess we'll have to see what comes out of the Bernank of the course of the next month. Should be interesting.
The idea that we can "Re-Build" an economy and have a solid future based on Yuppies eagerly tendering their credit cards is now offcially being branded as folly, a huge mistake from the days of Reaganomics. Even it's own architects are now all declaring what a mistake it was (and still is)
.
sub 1%, not minus 1%....
I see you spotted your mistake!
I did, but thank you.
I thought the world was falling apart in 2009 until the Fed lit the booster rockets and the economy started to climb. Each time the boosters ran out of fuel, the ship started to tip over and fall back to earth. Since October 2010, things have been extremely uneven from a business activity perspective. I think the last booster has petered out and we are now left wondering if/when they will light another one. How many boosters were there to begin with? The number isn't infinite despite people joking about QE infinity, the concept is meaningless. The whole framework will come undone and we are seeing it in Europe.
OT: since when did "default" become "reprofiling"? Changing the word doesn't change the reality. Nonsense. The Fed is reprofiling the dollar...
Thursday smorgasbord of appropro quotes:
Farewell and adieu to you, fair Spanish ladies. Farewell and adieu, you ladies of Spain. For we've received orders for to sail back to Boston. And so nevermore shall we see you again. (Quint)
Well, I guess the laws of physics cease to exist on top of your stove. Were these magic grits? Did you buy them from the same guy who sold Jack his beanstalk beans? (Vinny Gambini)
Nothing stops. Nothing... or you will do the hardest time there is. No more protection from the guards. I'll pull you out of that one-bunk Hilton and cast you down with the Sodomites. You'll think you've been f***d by a train! And the library? Gone... sealed off, brick-by-brick. We'll have us a little book barbecue in the yard. They'll see the flames for miles. We'll dance around it like wild Injuns! You understand me? Catching my drift?... Or am I being obtuse?
Give him another month to think about it. (Warden Norton)
Check that USD/JPY take down. Nice currency manipulation to secure the S&P.
OK, so when do our beloved govt officials finally start prosecuting bankers? When do the layoffs come from the financial services industry? When do they drag B. Bernanke from the Eccles building? When does the recovery begin?
FUBAR! Helmets on, boys.
The recovery begins when this central banking cabal is taken out!
What do u guys think of todays Mish article ::
http://www.marketoracle.co.uk/Article28325.html
I think it proves the old adage that "There are none so blind as they that will not see".
NSA payroll drivel.
Mish thinks unions and deadbeats getting free houses because of bankster foreclosure frauds are economic armageddon...
You can't scroll through his posts very far without finding these recurring rants...
The guy is busy spraying ants while the house is burning down...
There is no demand, no growth, nothing. You can stuff the WS pigs with cheap money but it's not 'passing through the system', something is def. wrong this time around.
Not passing through is the plan.
I would not want to be holder of a loan as the currency is being devalued -- No matter how credit worthy the borrower may be. So clearly all the money printing is not meant to expand credit.
Forget 'no QE3'...right since everything is far worse and QE is now an undeniable total failure, MORE of it stat!
I don't like the word "Stagflation" to describe the current environment. I think it suggests 1)That this is similar to the environment of the 1970s, requiring the same solutions (that have now failed) 2) That like in the 1970s there is wage and real estate value growth (which there isn't) 3) That we can somehow "Muddle Through" without making adjustments.
We're in an inflationary depression, aka Biflation to use my own word for it. This is why deflationistas AND inflationistas are so frustrated in their ability to describe and predict what's happening on a macro level. Part of the reason they're stumped is that the economy is now more globalized and less compartmentalized, more subject to the winds if change outside the US. The end of cheap energy is another major contributor.
Sell EuroUSD and stocks
Buy long end of US treasuries
http://deadcatbouncing.blogspot.com/
Like napalm, I love the smell of a bad BLS report in the morning.
I think the word everyone is seeking is actually "Depression" because that's what we're in, even though nobody wants to admit it.
Everything is depressed - housing, retail, manufacturing, construction, macro, micro, it all sucks wind. Mention any sector of the US economy and it's one bad data point after another. The GDP report is so flawed from a technical standpoint as to be laughable. Motor vehicle output adds 1.28%, but that's just cars rolling out of plants, not purchases. Price index for gross domestic purchases increased 3.8%, but GDP grows only 1.8%. Simply put, we went backwards 2% for the quarter, and the reality is even worse.
Meanwhile, in DC, the asshole politicians think they can just argue and posture while the debt limit is exceeded day after day. We are through as a nation. We are now just a collection of individuals, so plan accordingly. Every man, woman and child for him/herself.
The greatest depression!
Translation for Dummies: The green shoots are actually green shits.
Or another magic number like PCE up X.Y%, with personal income and borrowing down.
After 3 or maybe it's 6 decades of a congressional and fed-sponsored national credit binge, my speculation is that most of the "growth" metrics are actually just expansion based, and either are now or will end up being useless when the debt-collapse sets in and the contraction hits the states and the fed.
And the worst part is that we have during that time hollowed out the economy to the point that the FIRE sector has generated all the profit for many years now, take that away and we will be far worse off than we were in the 30's. Can anyone here see a future for privatized and subsidized feeding stations? Can we IPO that concept bitches?
Wait till Oduma gets back home.....tax-cheat timmy gonna get it: ...a raise and a promotion !!!
TD: Isn't there a leading indicator metric here, like unfilled orders minus inventories, or ?
Anyone?
Speaking of... where is the dear leader? Not in Okie ctry that for sure.
Bubba sez:
This is just nuckin' futs! Hasn't anyone in charge studied general systems theory?
RD version: The more one tries to control a natural process such as a market based economy, the less controllable it becomes.
Batten down the hatches! We're in for a wild ride!
We all have a duty to remember and pass on to the young how we used to be back in the late 90's when we almost had a real surplus and people had work. I mean real work and not just defacing young people with tattoos.
Not that GDP is a good measure of economic growth and prosperity, but it's pretty pathetic when all the fed knows what to do is push and pull on meaningless levers to goose growth numbers (at the expense of tax payers and the real economy) they can't even do that with trillions in worthless paper.
RoboTrader says one can't fight "Uncle Gorilla."
I heard the same thing in 2007.
All of Bernanke's (and Greenspan's, for that matter) alleged solutions to problems and crises were variations on the same, tired theme: Goose easy monetary policy.
All either succeeded in doing was kicking the can, and making the next crisis worse than that which preceded it.
You not only can fight "Uncle Gorilla," you can literally pick your spot and win.
Equities - and let me say this clearly and unambiguously - with or without additional easy monetary policy applied, whether in the form of QEx or any other formula, are beyond overstretched, and beyond any semblance of any value ratio that would make sense to anyone other than Jim Glassman & Kevin Hassett circa 2000.
Ben Bernanke is going to lower interest rates, pump the financial sector full of cash, backstop loans with the help of Jeetner and Obama with U.S. governmental guarantees, buy more toxic assets from financial actors at massive overvaluations, and everything will heal itself. He's done it before, it worked, and it will work again. /SARCASM
And yet another manufacturing survey joins the jump off the cliff.
05-26 11:00: US Kansas Fed Manufacturing (May) M/M -2 vs. Prev. 17Don't worry... Obama Bin Lyin' can revise this...