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Final Q2 GDP Disaster: 1.25% Growth Comes Below Lowest Estimate
So much for the US recovery (we will never tire of saying that). After the first Q2 GDP revision bubbled up from 1.5% to 1.7%, the sellside brigade was confident that the rate of growth would continue and final Q2 GDP would be in line. Instead, we got an absolute shock of a print, with the final Q2 GDP print coming in at a ridiculously low 1.25% (rounded up to 1.3%), below the lowest Wall Street estimate of 1.4%, and the lowest number since the revised 0.1% reported in January 2011. Here is the final GDP trendline: Q4 2011: 4.1%; Q1 2012: 2.0%; Q2 2012: 1.25%. Luckily, at least "housing has bottomed." The reason for the major contraction in the final print: a downward revision to all favorable components except Government which detracted the least from growth in years at just -0.14%. Of note - Personal Consumption was 1.06%, down from the 1.20% per the second revision. If nothing, we now know just what data Bernanke was looking at on an advance basis to come up with QEternity, and we also know the reason for the media and administration's all in gamble to reflate housing yet again. If the housing market does not go up courtesy of infinite cheap leverage, it could be curtains for the Bernanke reflation experiment.
Luckily, the centrally-planned policy vehicle once upon a time known as "the market" refuses to react to this horrendous, if only for the meaningless economy, news.
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The only other place we've seen sequential 2 and 3+ sigma events is with the replacement NFL refs. Go figure.
I want Hatzius's take on this, IMMEDIATELY!
The housing market cannot possibly reflate for one simple reason: The number of buyers is microscopic compared to the number of retiring boomers who are sitting on the bulk of the nation's real estate value, and are just now beginning to sell. Demand for new homes is pissing into the wind of demand to cash out of nest-eggs. Bernanke is dreaming. We are looking at a generational changeover. No amount of short term policy can counter the tsunami of new inventory as the world's wealthiest generation liquidates it's most expensive assets.
Boomers.....dam.....totally forgot about those guys.
They screwed the pooch by making QE open ended: now investors have nothing left to look forward to. I gave my kid a GameBoy when he was young just to have something worthless to take from him punitively. These guys got nothin' left.
I've never been more sanguine about my large--55% of total total assets large--precious metal metal position (and another 20% in energy crap.) Bankers Gone Wild. They will not be able to claim they weren't warned. The whole World is watching this cluster fuck.
Oh yes they do - the tap opened ever-wider until the entire system reboots.
To hear the collective outrage over the NFL ref debacle around my office, one would be led to believe that there is hope for the US to regain our senses, collect ourselves, and rage against the people (bankers/politicians) who caused this mess.
However, when I try to talk with people about pressing things (like the complete collapse of our financial system) I tend to have nobody to converse with.
Give 'em circus and beer!
Beer is but liquid bread.
Sad ain't it...
i hear the same crap in class (its free) and amusingly its a real estate class (contract law). I hear the most funny things the uniformed have to say about how things are going. I convince myself i am from some alternate universe otherwise i would be in the majority. I also keep my mouth shut as I notice people have no clue and don't want to wear the "class kook" hat.
People have no clue as they are brain washed by the MSM.
Let the reaal NFL Refs run the economy. The fill-ins seem to already be doing that.
Shhh...you are making it difficult to ignore the conflagration in Rome. Best to keep to yourself, or you willl be branded a witch, for being able to see the future.
....and what do we do with witches???
You gave your kid a toy just to be able to take it away as punishment? That's Evil. And Fantastic! Multiple green arrows for you...
These guys got nothin' left
Couldn't the Fed hint at increasing the $40B a month to some unspecified amount if "future conditions warrant"? That would give speculators something to look forward to.
Yeah, we boomers are a bubble but i for one have my own SS, healthcare and food stickers: PMS in the back forty , pumping iron and good homegrown food. ZH and African radio for entertainment and inspiration. THANKS ALL!
Pop,
Spot on.
DavidC
Add that massive tsunami to the already 10 million in shadow inventory that are not listed and we get 20 years of supply.
It gets crazier; I just read a new developer got approval to build 4,000 houses down the road. Who is financing this stuff?
Prices will never stabilize due to this massive oversupply + the reckless zero down policy.
The US taxpayer.
Oh I highly encourage them to build 20,000 new units. Make it 30,000. Oh hell make it 100,000 new units "down the road".
As a renter I can't be more thrilled when I hear about new luxury condos being built. Go ahead dumbasses, triple that inventory. Quadruple it into the face of falling salaries, credit tightening, increasing unskilled labor and of course: the great Boomer die-off. Build build build!
I look forward to living cheaply in your expensive houses!
You will live cheaply until Ben starts printing trillion dollar bills...
It's working for the Chinese.*
* If your time horizon for investment return is the length of time it takes to do the construction.
Add to this the generation of slaves to student loans who won't be able to get a mortgage on their own. Well, it spells trouble in river city.
You're only a slave to it if you choose a new car, cable, iDevice, dinner out, drinks at the bar, hipster clothing etc etc etc over paying your goddamn student loan.
+1 for solid ZH post. Excellent and depressing. Will repost this with full credit given.
Nah, the boomers won't sell their homes - their 30ish children got no place to go...
Assuming, you're talking about inheritance (as in, the parents have died): Statistically speaking, the kids pretty much always sell the house.
For one, there are on average 2.5 kids. They sell it and split the equity.
Secondly, statistically most kids don't live near their parents any more.
The third reason is more cultural: people would just rather not live in their parents house if they can help it -- and in general their spouses feel even more strongly about it.
But whatever the reasons, the stats say the houses get dumped on the market just about every time.
If the kids were lucky, the parents HELOC'd out a motorhome.
Another trend is that while housing prices and mortgage rates have been going down, property taxes have been heading up, up, up. Don't look for this trend to reverse anytime soon. I've looked at some properties lately where the taxes are so high, they outstrip the mortgage. I'm tempted to ask: where's the second house I'm paying for?
I'm tempted to ask: where's the second house I'm paying for?
it's devouring bonbons while you're waiting in her line desperately trying to get some document approved by the city that has been imposed as an additional tax without naming it as such. The best part is, when you buy this house, they throw in the diabetes for free.
I've looked at some properties lately where the taxes are so high, they outstrip the mortgage.
Interesting, where is this happening? Give us a city/zip code.
...and their kids are moving back home with them, because what jobs they can find, are at McDonalds. At least those nursing degrees will pay off. Think of how much money we can save by children actually caring for their aging parents.
ask and ye shall receive....
Mr. Hatzius....
3. The Commerce Department revised down its estimate of Q2 GDP growth to 1.3% (quarter-over-quarter, annualized) from 1.7% previously, suggesting a more marked deceleration relative to 2% growth in Q1. The downward revision was fairly broad based, with personal consumption spending revised down to 1.5% from 1.7% previously, and non-residential fixed investment growth down to 3.6% from 4.2%. Inventory accumulation also was revised lower, partly because of the impact of the 2012 droughts. This is a drag on current estimates of GDP growth, but suggests that production is more in line with final demand.
BOTTOM LINE: Data released this morning send mixed signals. On the one hand, durable goods orders decline more than expected in August and Q2 GDP growth is revised down from 1.7% to 1.3%. On the other hand, initial jobless claims drop sharply in the latest week and the preliminary benchmark revision to the establishment survey points to a higher level of employment. On balance, however, we interpret this morning’s data as soft. We cut our Q3 GDP tracking estimate from 2.1% to 2.0% and the August CAI fell one tenth to 0.7%.
We, Jan Hatzius, Alec Phillips, Jari Stehn, Andrew Tilton and Shuyan Wu, hereby certify that all of the views expressed in this report accurately reflect our personal views, which have not been influenced by considerations of the firm's business or client relationships.
Apple just priced at $666. Significant among the very Christian? Or anyone?
I've been thinking about this...We are told to watch for the sign of the beast and no one said it would be printed on someones forehead.
This could be the sign now couldn't it.
See my link a few posts below... 0_o
stocks surge on news that hope, dreams and puppy kisses will boost the market
There ain't no hope, only bad dreams, and the puppy's on the Whitehouse dinner menu...BUT it's a beautiful sunny day in Amerika!
/s
Good is Good, Bad is Gooder
Mmmm. Warm, steaming skittles. They're best when freashly shart from the unicorn.
This is disastrous for deficit projections, a total train wreck for tax revenues.
Taxes are so over. They're a barbaric relic. All hail our central bank overlords! Long may they print!
I trust "personal consumption expenditures" was normalized so as to not include pesky, inconvenient items like food and fuel, correct? How else are we supposed to get a realistic view of growth?
(sarcasm)
Food and gas are discretionary items. Gov't interpretation: People are not being discreet enough. Get with the program, people.
MORE QE! oh, uh, er...nevermind.
QE-KITCHENSINK a coming down the Hilsenhooter in 3,2,1....
No, they're on their own this time. The question is how long will it be before rah-rah permabulls become aware of the lack of rumors? Perosnally I wouldn't have used my last bullet on a 1.2% print but maybe he knows about more than this.
KEYNES!!!!!!!!!!!!
another "but" day and futures ramp. I'm so sick of this horseshit, just hurry up and fucking collapse already before my canned goods expire. One stupid ass lie after another.
Canned goods never really expire. They just taste bland after a while.
i/we share your disgust.
It's a good thing GDP has nothing to do with economics and the capital markets, or we'd be in real trouble.
HEH! al-Reuters is blaming "bad weather" for the horrendous Q2 GDP print - http://reut.rs/VNyXop
Welcome to The New Soviet Union, fellow comrades! Pudding yesterday, Pudding tomorrow, but NEVER Pudding today!!
The worse it gets the more they have to lie. Pretty soon stories will end in an exclamation point.
Then all caps.
When MDB gets hired, it is over.
pods
And there s a China rumor to cushion the blow
Futures green
Yangtze Red. Bizarre: http://www.dailymail.co.uk/news/article-2199800/The-river-DID-run-red-Residents-Chinese-city-left-baffled-Yangtze-turns-scarlet.html?ito=feeds-newsxml
And that right there is the reason why so much production has shifted to China.
Almost surreal. Like when the Cuyahoga river caught fire in the US.
Talk about pissing in the bath water. More like bathing in the sewer pond.
And with all those skyscrapers in the pictures there is the capital to prevent this shit.
They just don't care.
pods
with inflation counted properly the print is negative . . . not to mention C + I + G + net I = Y, so, since "G" can be anything they want it to be (especially now tha the fed is financing almost of all G in excess of tax revenues), GDP is pretty much a meaningless number.
"CURTAINS ROCKY, CURTAINS!"
"If the housing market does not go up courtesy of infinite cheap leverage, it could be curtains for the Bernanke reflation experiment."
I would be shocked if the Fed ever admitted defeat or changed course. Love to be wrong, but I just can't imagine that happening.
Printing Money will not increase House prices. It does not matter how low the interest rates are if the Banks will not lend the Money.
The lower the interest rate the less likely that the Banks want to lock in a 30 year loan at current rates.
The Banks have made it almost impossible to qualify for a loan. Then you have the problem of Appraisals. The Banking sector took over Appraisals in 2008 and it appears that they are intentionally under Appraising houses.
Every single house I've looked at in the last few weeks has been bought quickly for cash with multiple offers. Distressed housing in nice areas.
That just happened in my neighborhood. A neighbor lost his job and had to sell his home. An investor swooped in and paid $$$ for the property at a modest discount to what other homes in the area have sold for recently, and the buyer had it rented out within days.
The Bernanke will not admit defeat, but he will light the curtains on fire.
So Ahmadinajad was right after all, The situation in his country is better than in the US or Europe.
If your worthless fiat currency is more worthless than my worthless fiat currency, that means I'm winning, right?
2Q12 was so yesterday. 4Q12 is gonna be a hockey stick bullgasm. /sarc
FORWARD! (spit)
Barry O's campaign slogan is, and I quote, "FORWARD."
There is no exclamation point. Just a period, as in stop, the end, there is no more in this thought.
"hockey stick bullgasm"
leading to ...
ES 1700
AAPL $1,001
WTI $140
GOLD $2,500
DXY 50
EUR/USD 1.60
Every bull Mungering their underwear 24/7.
Housing's set to tank at least 75% in real terms from here.
Market set to tank at least 75% in real terms from here.
fixed it for ya
Silver's set to rise at min. 3,000% in real terms from here.
Now it's fixed.
Both of you are incorrect. The value of your stuff should slowly fall due to productivity increases making it easier to produce it.
The problem is the measuring tape, not what you are measuring.
pods
No, pods, certain things will increase in value and certain things will decrease in value. You would be correct if free competition currency was allwed, but even then, there will always be bubbles.
Right now the bubble is in the dollar, dollar denominates assets, and assets bid up by cheap credit. When this bubble pops, much of that wealth will get destroyed, but much will also flee to the safety of anything that will retain its value in order to try and save their wealth from being destroyed. PMs, especially silver, will be an enormous benefeciary to the collapse of the fiat/credit/debt/bond/government bubble.
nope, pods is correct (in non peak items)....over time with all things being equal except productivity gains, prices decrease....on everything.
It's ok...we have FedDP to replace GDP. Futures just hit high. Full retard just jumped another notch and is now, full retard bath salts
"full retard" has shifted to high-speed "eternatard"
(in Eterna-munger pearl color).
Not even going to worry about the ramp today and tomorrow. October is when the fun starts...
Bernanke, "Print!"
The numbers were complete shit, and yet the markets ignore them! The jobs numbers are complete bullshit, other than the standard upward revisions of 3-5k every month!
What are these 'markets' of which you speak? I know only of equity casinos, and have no idea what a 'market' is.
Markets are pricing in...
QE4!
QE4!
QE4!
Q....
1.2%GDP growth, 5-8% inflation Fuck You Bernanke
Get to woik, you'ze da only game in town, Chairman.
BTFD
The Components of the GDP by Quarter chart will be interpreted by fucktardian economists everywhere as meaning "The Government Needs To Spend MOAR!"
but...but...but global QE!
Check out September so far
On the 2 days of Fed/ECB mkt up 3.9%; all other day down 2%
http://marketmontage.com/2012/09/27/reviewing-septembers-market-another-month-where-central-banks-drove-all-performance/
Look for the lagging indicator excuse to be out in full force and thus the report should be ignored. Of course the data would have been trumpeted if GDP had been revised upward.
Bullish
edit
The effin U.S. 10 year is up almost 4 basis points? That should be interesting to watch over the session.
That's just Q2, I've got a good picture how Q3 will look like and it's way worse over here in Europe.
And this time, companies don't have the reserves they had in 2008/2009
This crisis will bite us in the ass like there's no tomorrow
You're right Buzz. I caught your post on machinery orders yesterday. Thanks for the update. :-)
(GDP) - (6% inflation) = corrected GDP
More like 11% inflation. Shadowstats.com
Buy buy buy, bad news is good again. Why? Don't ask questions get in there. And buy OJ futures.
Who here is greatful (in a cynical sort of way) that TPTB have kept the show running, enabling us to prepare accordingly, but also infuriated that they've kept it running far longer than any of us thought possible?
so far Rajoy is 2 hours late......hmmmmm..must be a hell of a speech
Yow! That was unexpected. But combine that with the CRASH of durable goods orders and we have a partay!
http://confoundedinterest.wordpress.com/2012/09/27/bad-economic-news-q2-gdp-slumps-to-1-3-durable-goods-orders-crash-13-2/
We're going to party like its 1099!
I thought the rule was only round up to an even number for 1/2
Welcome to New Math!
If every dollar of debt adds only 50 cents to the economy, then every dollar of toxic QE derivatives garbage the FED buys from a bankrupt bank must be like a secret mutant three-foot long termite that can eat anything, unleashed into the sewers beneath Wall Street. Think of it! Hordes of them, eating, eating away as the traders scurry- er -watch the HFT numbers on their i-phones, directly above the termite hordes.
Termites now, C.H.U.D.s later.
http://en.wikipedia.org/wiki/C.H.U.D.
We are in a permanent global depression. If you understand that, you can prepare accordingly.
Of course, if you choose to be a "see no evil" eternal optimist, you can go into debt to live in a McMansion and buy an oversized SUV, put all of your money in Treasuries and a Dow Jones index fund, grab a bag of Cheetos and sit on your butt to watch the college football.
You take away all the government spending since 2008 and were still in a recession. The only growth is in debt, unemployment, inflation, and big brother.
See folks, communism does not work, or does totalitarianism and that my friends is next!
But China is going to print money so this does not matter right?
"Here is the final GDP trendline: Q4 2011: 4.1%; Q1 2012: 2.0%; Q2 2012: 1.25%."
Sounds like QE worked wonders... not!
100% FUBAR.
Don't forget: All the fake federal budget cuts assumed at least 4% growth. Maybe it was even 6%. Does anyone remember?
Where's Clint and the chair ? ? ? ?
Don't worry, the mainstream media is already claiming obama is the winner of the debates.
The Bernank wants obummer re-elected so he can keep screwing us for 4 more years - it's good to be king
With all that money wasted benefitting mainly the wealthy (so much for the trickle down effect) and only receiving a 1.25% print is beyond pitiful, but what's even more pitiful is you've and will hear from those benefitting the most from debt slavery that obviously the only thing to do is more and on an even biggerer scale and of course it will happen only to progressively worse for everyone because the only thing that drives policy is an unending thirst for greed and power and the only thing driving the only hope for change (the masses) is an unending complacency and unwillingness to wake the fuck up and from their smartphone induced comas or is it waiting in line be it foodstamp or iphone thus benefitting JPM or AAPL even more?
The new china tablet pc smartphones, both with 4G network capabilities, are expected to hit Australian shelves sometime in November. Nokia has not yet revealed pricing or a specific availability date.