If readers need clarification on what was the primary source of spending-based "growth" for the US economy in the fourth quarter, the same source that bumped up final Q3 GDP from 3.9% to 5.0%, please ping us: we will gladly explain the chart below. And just in case it is still unclear what Americans are spending their "gas sasvings" on, here it is one more time.
Q4 Annualized GDP Misses, Tumbles To 2.6% From 5.0%; Surging Personal Consumption Pulled Forward From 2015Submitted by Tyler Durden on 01/30/2015 08:44 -0500
Following last quarter's upward revised 5.0% GDP, driven higher mostly as a result of even more mandatory Obamacare taxation, Q4 GDP had nowhere else to go but down, the only question was how much. Wall Street estimated 3.0%. Moments ago we got the first estimate for Q4 GDP and it was a miss, printing at 2.6%, and nearly 50% below the Q3 annualized number. This also means that the final 2014 GDP is 2.4%, higher than the 2.2% in 2013 as well as the 2.3% in 2012.
Now that the soaring dollar and plunging crude are sure to punish the Q4 2014 and Q1 2015 GDP growth rate by more than half, with estimate now sliding to the mid to low-2% area, what "benefits" to the US economy can one expect from the tax that is Obamacare? As the following chart courtesy of Goldman shows, thanks to contributions from Medicaid and Medicare and, drumroll, Exchange subsidies, the "benefits" from Obamacare will be with us, well, maybe not "us", but certainly with the way GDP is calculate for a long, long time, as the recent health spending ramp is only just getting started.
The government’s health insurance website is quietly sending consumers’ personal data to private companies that specialize in advertising and analyzing Internet data for performance and marketing... but it's for your own good - The Obama administration says HealthCare.gov’s connections to data firms were intended to help improve the consumer experience.
We are so brainwashed by centralized models of state authority that few can even imagine a system where the solution is not one centralized monstrosity ruled by a political/financial Aristocracy. A good first step would be to admit to ourselves that we don't really want solutions; what we want is magic: financial magic that makes healthcare free and affordable, medical magic that fixes all our lifestyle ills without forcing any rigorous adult routines and limits on us, political magic that transforms our system from its current corrupt crony-capitalist paradise into a functioning, transparent democracy and economic magic that makes all the unpayable debt vanish so we can borrow another $50 trillion, or $100 trillion, with no restraints on our spending or cronyist corruption. We have no idea what it will take to jolt us from our preference for magic over realistic, difficult (i.e. adult) solutions, but we suspect a crisis that threatens to completely unravel the Status Quo will be part of the process.
UPDATE: Full SOTU Speech released - "THE SHADOW OF CRISIS HAS PASSED"
By now it is well known that The State of The Union tonight will be about President Obama's Robin-Hood Agenda. Furthermore, it is entirely clear that his proposals have no chance of becoming law. As WaPo's Marc Thiessen notes, Obama is not delusional, his move is completely and transparently political... And just as Eric Cantor suggests will merely serve to inflame the GOP. From taxes to cyber security and from community college to housing... in 50-65 minutes, all will be clear...
While a record amount of ink has been spilled praising the benefits of plunging crude price on the US consumer, so far this has manifested merely in soaring consumer confidence, if not in an actual boost to retail sales. Less has been written about the adverse side-effects of plunging oil, even though by now even the most “undisputed” permabulls have been forced to admit that the imminent collapse in capital spending is truly “unprecedented”, a phrase Goldman uses in the chart below. So what does plunging CapEx actually mean for the economy, aside from a major haircut to 2015 GDP, and what other areas of the economy will be affected by the Saudi Arabian scorched earth war on the US shale industry?
The 30 Year U.S. Treasury bond yield hit 2.35% yesterday. Long term interest rates are not controlled by Yellen. They reflect the economic prospects of the country. When they are rising it means the economy is doing well. When they are plummeting to all time lows, the economy is either in recession or headed into recession. Take your pick. No amount of government data manipulation, feel good propaganda spewed by the captured mainstream media, or Ivy League educated Wall Street economist doublespeak, can change the fact this economy is in the dumper and headed much lower. The Greater Depression is resuming its downward march toward inevitable war.
Marilyn Tavenner, head of the U.S. Centers for Medicare and Medicaid Services, plans to step down at the end of February, she told her staff in an e-mail. As Bloomberg reports, Tavenner didn’t say why she was leaving. In November, she acknowledged that her agency had made a mistake in its calculation of the number of people enrolled under Obamacare.
The touts have it backwards. This isn’t about greeters at Wal-Mart handing out tax cuts to hard-pressed American consumers. Its about the coming liquidation of the massive malinvestments and bloated economies that have been enabled by rampant central bank money printing and the resulting madcap expansion of unrepayable debt. Buying-the-dip was always a strategy that would work until it didn’t. The “oil tax cut” tale is designed to ensure that Wall Street’s Muppets will be the last to get the word.
"By adopting these resolutions, Congress can make 2015 the year America begins reversing the long, slow slide toward authoritarianism, empire, national bankruptcy, and economic decline..."
We have great news for America's increasingly aging work force: the number of workers 55 and over just hit 32.9 million, up 1.3 million from a year ago, and an all time high. For those who happen to be young and, inexplicably, also want a job, we have good news too...
Following a disastrous Manufacturing ISM report last week, today it was the turn for its Service cousin to report. And while it wasn't quite the abysmal faceplant that some had expected the seasonally adjusted number to be, printing at 56.2, down from 59.3 and far below the 58.0 expected (but just above the lowest estimate of 56.0), it still was the biggest miss to expectations since September 2013, and the lowest print since June. And while the details were just as atrocious, with every single ISM component declining in December - something that has not happened since the Great Financial Crisis - a report which literallyh said "Obamacare and wages are still the biggest enemies to profitability", all eyes are focused not so much on the tumble in Business Activity and New Orders, but on Prices, which at 49.5, posted their first contraction since September 2009.
The brain incubator at Harvard, the place which according to legend, and certainly the US News and World Report's annual paid college infomercial, is the repository for some of the smartest people in the world, is furious.
Because Harvard's brilliant ivory tower economists and public policy wonks know precisely how to fix the world... as long as said fix never applies to them!