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Overhyped Q1 GDP Grows By Only 2.5%, Biggest Miss To Expectations Since September 2011
Less than an hour ago we speculated that "it wouldn't be surprising for GDP to come substantially weaker than expected, only to be revised higher (or lower) subsequently." Sure enough, we have gotten at least the first part right for now, with the advance Q1 GDP number printing a very disappointing 2.5%, on expectations of a 3.0% increase, up from 0.4% in Q4, and the biggest miss since Q3 2011. The reason for the big miss: Inventory and Fixed Investment came well below expectations, comprising 1.03% (of which autos represented 0.24%) and 0.53% of the 2.5% annualized increase GDP. Kiss the great CapEx investment story goodbye.
The only silver lining in today's otherwise very weak report: Personal Consumption Expenditures, which were a sizable 3.2% versus the 2.8% expected, and amounted to 2.24% or virtually all of the net Q1 GDP growth. So far so good .The bad news, however, is that this number will not sustain into Q2 and look for expenditures to plunge in the coming quarter. Finally, let's not forget that it rained like 5 days in March, so there's that. And of course, very soon, all GDP will be revised to add intangibles, so in retrospect Q1 GDP will likely have grown by a Ministry of Truth blush-inducing 10% or so.
And for those confused why the spending spree led "recovery" won't last, the answer is simple: the US consumer is out of money, as can be seen by this savings (or lack thereof) rate chart.
Source: BEA
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The GDP revision in July is less about statistical correction and more about how to manipulate income reporting as well. Not only will the revision make GDP look higher, it will also make it look as though incomes are rising unless I am reading the article from 2006 wrong.
http://www.nytimes.com/2006/04/09/business/yourmoney/09view.html?_r=0
I'm sellling my puts today and buying calls. We'll be up, up, up and away next week!
/ only half joking
BLoomburp headline
Economy in U.S. Grows at Faster Pace as Consumers Boost Spendingand the fine print
Gross domestic product rose at a 2.5 percent annual rate, lower than forecast,
http://www.bloomberg.com/news/2013-04-26/economy-in-u-s-grows-at-faster-...
Fucking Plouffe has only been there for 10 minutes and already he is hard at work
They are little more than stock market cheerleaders. Can't wait for the +$500 gold days to see how they try to spin it.
I was hoping I'd have to eat crow. I said on Monday the DJIA would be down 600 pts this week - well, looks like it might just bust through 15,000 any day now. And gold has rebounded to around $1470, so, yeah, I read those tea leaves very wrong. So, another $85 billion next week, sir? Thank you, sir.
It beat someone's expectations. That is all that matters.
The problem with reading tea leaves is they're really just shit weeds.
Shit Weeds - YouTube
I've changed brokers....and have gotten really good results with this guy.
http://www.youtube.com/watch?v=Y7ZN2F_7K7U
Did they forget to account for GM channel stuffing? That ought to be good for 0.5%
I'm afraid it is very clear that fundamentals don't matter when the Fed is printing a minimum of $45 billion a month, and that's what we know about. Next time you're thinking about about shorting the S&P please google "POMO schedule" for that month and think again. The rising tide. More like tsunami. Stay out of the way.
Thanks; will do.
"Next time you're thinking about about shorting the S&P please google "POMO schedule" for that month and think again."
And also look at the Weimar stock market for clues. My advice, everyone's advice here: steer clear of the ponzi.
http://nowandfutures.com/weimar.html
when you say half joking are you joking about selling your puts and buying calls or we'll be up up up and away. i hope your joking about the later
Don't joke about this. Buy 10K TNA, put your feet up and let Da Boyz do the heavy lifting for you. I'm a professional trader/Market Maker who bet on the short side knowing we'd see a GDP miss. I come in this morning, flip on my Brass and watch as my SPXU, UVXY and individual shorts slowly melt down (up?) as the morning goes on. ES being bid up. Resistance is futile. 5-7% corrections is the rule going forward. What a fucking joke this country has become.
The joker sits in the WH who continues to employ the Fed Chairsatan. The only conclusion a sane man can make at this point is that both want this country to go bankrupt.
Government loves you so sleep now rest assured
Your taxes make prisoners of war around the world
They'll mind warp and drug you rape your little girl
Your government loves you so sleep now rest assured
They want the world to go bankrupt. Co-ordinated government and monetary intervention.
"both want this country to go bankrupt."
Rahm to Obummer: "Never let a good crisis go to waste!" Of course we know the US is already bankrupt. We've just papered it over - lipstick on a pig - with trillions in debt based, reserve currency fiat, exporting our worthless debt about the world. Question for us really is, what will 'they' do next, and especially once things pick up to the downside (as so many indicators appear to show), and what will WE do...
Looking from the outside, i think the market wants to get to 15,000 before falling out of the wedge.
Wall Street loves those good round numbers.
Yes, just over 15K before it hits the bottom of the channel at 14666 and bounces to new all time highs.....lol. It never ends, until it does.
But... but... but... Zandi said it would be 4%. Don't tell me he's wrong????
Zandi is an assweasel
I'll drink to that. Hell, these days I'll drink to anything.
Here's to 'non-sense.' Cheers.
Just read the article. That's one way to get companies like Solyndra and Fiiskars to boost the GDP even if they never make a dime.
Now we can keep funding other money losing endeavors, and we will all benefit from the boost in the economy.
These numbers aren't even relevant anymore.
Cursive (and anyone else) I never saw this Santelli interview posted on ZH but fast forward to 4 mins 30 seconds in and listen to this greaseball douchebag hyundai salesman economist describe how to boost GDP.
http://www.youtube.com/watch?v=F_HAD9NqBk8
Buy even more crap ... give this man a cigar ...
If I owned trillions in UST's I'd be somewhat concerned. But that's just me.
bearwagon, you are correct...they are not relevant...to us....but to 90% of the population, all they get out of this is the bloomberg headline. and it's positive.
"but to 90% of the population, all they get out of this is the bloomberg headline." - that may be true for most of the sheeple. But they also know 2 or 3 people personally that are un and under-employed or that can't hit their quotas, or are losing their homes, or pretty dramatically downsizing, even going on food stamps, soup kitchens or going homeless.
While people desperately want to be positive, and don't quite understand why things are the way they are, they know that things are not all peaches and cream in Obummer's Camelot.
Yeah, and that's the mentality of the supposedly smart, no wonder we're in the mess we're in.
These aren't the numbers you're looking for. (wave hand, invoke Jedi power)
It says volumes about this administration that they can't win at a game they've rigged. The Chicago Machine ain't what it used to be.
"we don't appear to be uniting around the lie" here either do we Che. The call getting Congress to agree on anything "cat herding" but that's nothing when dealing with a Wall Street that's just talking it's book. Sure we all want a good economy...but is there anyone actually trying to create such a thing?
"Sure we all want a good economy ... ."
Common misbelief.
In fact, the majority simply could not care less about the 'economy', good, bad, or indifferent.
The majority being welfare recipients and government employees, and various and associated hangers on.
All they care about is that the goodies keep flowing. Not a single one could give a shit about there being jobs or not being jobs available in the private sector, or whether a small business (or big business, for that matter) actually makes money or is economically viable.
In California, there are 139 .gov.union employees and welfare recipients for every 100 in the private sector.
And remember, democracy is 139 wolves and 100 sheep voting on what to have for dinner.
< ------BLS numbers are propaganda.
<------ BLS numbers are true and accurate.
Anyone know what the "deflator" is?
Flatulence. Sorta like a big balloon deflating.
Anyone know what the "deflator" is?
The 240-lb hooker who isn't the double-D model shown on the site you called.
everyone getting 29 hours a week of work to avoid Obamacare?
You can almost make a living working 3 jobs @ 20-25 hours each.
Is Personal Consumption Expenditures gubspeak for "stockpiling"?
'Hollow point ammo'
I'm heading over to my lesbian friend's place later today.....what are you looking for? She has a government source.
You're going to see Big sis?
Don't worry they are changing how they calculate GDP soon. So this will be revised up to +4%.
exactly - after July NetFlix, Twitter, FB etc will be part of GDP calc
Real #? Certainly an actual negative. Who are they fooling here, themselves?
#WHATEV.
Not to worry here comes the FED to blow this bubble bigger
The ONLY reason why this number is positive is due to FED QE. Were it not it would be like every other place, negative GDP. In the mean time the number of people on food stamps hits a record. Chew on that for a while
I wonder how much guns and ammo added to GDP.
I think guns and ammo are the only thing holding the GDP up.
Seems everyone can 'see' this trainwreck coming, but no one can find the brakeman. Cripes - we's in trouble, soon.
It really goosed Cabela's earnings.
The only thing I bought last Q other than food and kids stuff, was a Henry .357 Lever Action Rifle.
Beans and Bullets my friends. The rest is all BS.
To be revised lower over the next few quarters... Does Personal Consumption Expenditures include higher taxes and insurance rates?
CONSUME you damn peasants!
My estimation was off by only 0.3%. Now, where is my "Nobel Memorial Prize in Economic Siences"?!
Biggest GDP miss since 2011 and the ES contract 'tanks' a whopping 1/2 tick.
That's what the early release does. All this was priced in 3 days agao.
S&P500 Daily since January 1 - up 12 percent in less than 4 months - with 48M Americans on food stamps.
http://bullandbearmash.com/chart/sp500-daily-closes-flat-remains-bull-ch...
Let's see where the Ben and Barry gong show takes us today.
So basically a .625% quarterly economic growth rate with a concurrent 2.061% quarterly US Government debt growth rate. Yeah, thats totally sustainable.
Must....Print.....Fasta....
What does GDP matter anyway? In Q1 with a dead .4% number, we had the largest % stawk market increases ever!
now you know why they want to start including "intangibles".
GDP goin all 'quantum physics' and whatnot.
The GDP has transmogrified into a gigantic quark. A very 'charmed' one, or maybe 'strange'.
Meanwhile, the S&P more and more resembles the 'up' quark. Can't wait until it changes into a 'down'.
+1 Exactly. That growth rate includes intangibles, and they still missed. Someone didn't read the script or the real figure was way too bad to manipulate without giving the game away.
As for deflation I have a possible explanation if my area reflects as a sample: Nobody has any disposable income, businesses are closing, and multinationals are squabbling amongst themselves using price to differentiate in competition. That cannot last long.
To be revised lower in a few weeks.
Imports & gov't are down - I'd say this is a good print. :)
Paper PM immediate uptick - MOAR Bux please, Mr. the Bernank!
Just out of curiosity. Does anybody really believe they can calculate GDP accurately anyway on a $15 trillion economy? Think of all the moving parts that go into an economy of that size and remember the government can't even count its own employee numbers correctly, so the chances it track an economy of this size and produce figures that are accurate to a tenth of a percent is a nonsense. My guess is the marging of error on these numbers is at least + or - 3%.
16 trillion economy...
economics is an art not a science..even its measureument, as you point out, is an extrapolation of samples and GIGO numbers; hence the need for three or four revisions to data.
same goes for fiscal numbers...budget estimates v actuals gaps of 1% are well within the margin for error.
i am still trying to get my head round the upcoming revisions to GDP that will count contributions from the entertainment industry differently and that are going to revise all gdp back to 1929...
should we use GDP as a scorecard/snapshot..or should we just use the trends in GDP and apply a dose of common sense to these.
if you can work this out, look good and complete a PhD, there are wall street banksters that will employ you on 7 figure compensation.
Do you think we actually have a $15 trillion economy?
Tyler what are you trying to do to me with 'Hook up with exotic Latin beauties'? Yea, some of em are pretty hot, but they'll CUT you!
you have been cheating on the flock again !! the ads track your surfing habits..
sheeple tracking can be a good market predictor though:
http://www.bbc.co.uk/news/science-environment-22293693
ok, so over the last three years
govt consumption is a drag on growth
personal consumption is a big boost
there is a rogue drop in imports in 4q2012 (cancellation of boeing 737 orders?wtf?)
fixed investment is a positive and inventories are a wash.
in other words, there is investment for the future, comsumers are spending loads of money and the government deficit is contracting...yeah right.
where does the additional 2 trillion of fed spending go (12.5% of gdp)?
Deleveraging of shadowbanks?
could be...or the prop to personal consumption from student loans,
hard to see how increase in SNAP, welfare payments, increases in federal, state and city taxes, high gasoline prices plus a host of other pressures on consumers results in steady increases in PCE's
seems like price increases in staples are being included in spending numbers and not inflation numbers...errors and misinformation.
positives could be spending of increased dividends (the stock market rises are the result of balance sheet restruturing?) or people with more money to spend because they have refinanced their mortgages?
where are the numbers for refi mortgage data, yanno, amount of mortgage principal outstanding at what rate in 31 March 2007 v 31 March 2013? (march year ends for trends etc).
What are "savings"?
It is future stimulus as apposed to present stimulus. Savings is not, it repeat not, investment. You must not save or you will destroy the present prosperity.
Personal consumption up huh? I wonder how many of these dollars was due to the spike in gun and ammo sales.
No need to wonder.
It cannot be bought in bulk at any price.
Your "personal consumption" of these products has been curtailed.
Cabela reported something yesterday. Whatever it was, it caused their stock to go up. 16% after hours. Had something to do with sales, I think. Hm. Wonder what they sell ... ?
The global economy's future explained in an 18 second youtube video. "DUDE!"
http://www.youtube.com/watch?v=0zioMFv2_pk
Not mentiioned at all- Corporate profits AFTER taxes fell in the 4th quarter of 2012 by 1.12% from the same quarter in 2013.
And you wonder why businesses are putting on the brakes?
When your sole focus is on disarming the people, lying to them and empowering Muslins, this comes as no surprise. As planned in other words. Time to get rid of this joke!
Would like to know what % of this miserable report is attributable to DHS bullet purchase?
Just another pointless set of figures that are manipulated to print where they want them to to move te markets where they want. Bit like the swinging shiny watch of the hypnotist as he puts the masses under. Look into my eyes!
Where is the aspirational consumer??
Peasants are not consuming and getting fat at the ordained rate.
We must try different tactics....."consume now or get priced out!"
And, if consumer prices are higher by 2.5 or 3 or 4 percent (or higher), is the economy really growing? I would like to see unit sales of particular items, like food, energy, autos, household durables, for instance.
It's like the housing "recovery" which shows fewer sales, but at higher prices. No sheet, Sherlock. If interest rates were, say, 1% on a 30-year and the down payment - already at a ridiculous 3% level via FHA - people could once again afford McMansions.
The level of gullibility of supposed "experts" in finance is incredible.
why not just print 5%?? WELL THE NUMBER MUST BE ONE SOME OF THE EYES WIDE SHUT CROWD CAN ACCEPT.
Prediction
"... a large inventory boost contributing about 1pp to growth."
Reality
"The reason for the big miss: Inventory..."
Goldman really dry cakered the muppets on this one.
Who cares about the real economy or fundamentals, as long as the Dow and SPit are at all times highs nothing else matters to the 0.1%
Lets see. 2.5% growth -- 2.5% real inflation. Statistics don't lie -- Liars use statistics
Look - this ain't hard. There is no driver for the growth they are looking for. No tech boom, no housing boom, not even a natural gas boom. Overleveraged consumers are not going to pull demand forward. Housing is only surging in the sense that it has recently regained a pulse after some time on the "suspected dead" list, and the prognosis there is for very slow growth, with highly constrained credit conditions preventing many would be homebuyers from jumping into the pool. Sure there are pockets of sunshine, but the overall view there is subdued.
The New Normal is very, very slow growth, not enough to feed the highly leveraged and voracious Bankster machine. Hence, the printing to maintain the facade of growth. It's the FLOW, stupid. Everytime you hear someone say the Fed is thinking about cutting back on printing, it is a lie, pure and simple. Stop printing, stop the flow, and the game ends. By the way, it will end anyway, but not before elite pockets are heavily lined.
"it rained like 5 days in March, so there's that."....LMFAO!
Correctamundo, Ned. The charts say average GRP "growth" over the past 10 quarters was 1.9%. With inflation higher than that, and US population growth a touch below 1%, we're at stall speed.
Also, that huge personal consumption figure this quarter was made up of what? Higher food, heating and gas prices, likely contributed about 60% of that number. So, great, we're paying more to stay alive, warm and mobile. Whoopie! Break out the party hats!
I would love to see how they think Americans are going to pay the 50-100% premium increases from Obummercare coming up. These are not small increases - the average family of four would need to come up with an additional 400-500 per month - every month - forever. Good luck with that. If the money existed you would see it in the savings rate.
Rick Santelli, the only commentator on CNBS who can be trusted to say anything close to the truth, made a good point this morning, wondering if the underground economy was a large contributor to the personal consumption number. But, he also noted that the UE money was not being reported as taxable income.
He may be on to something, there. If I make $300 via a garage sale or on Craigslist, I spend some of it on food, gas, etc. (the rest goes into silver), so, magically, spending shows up without corresponding income.
I'd suggest that the UE, plus food stamps (both spent and fraudulently converted) will continue to be a big driver of GDP. In fact, .gov should increase those limits on SNAP to make the GDP really soar... along with the intangible addition, of course.
Oh, yeah..."and Phuck you Goldman Sachs."
Market already in there with the push higher - bidders in there. I have been trading for over 20 years and never seen anything like we have seen for the last 2 years but especially the last 4 months where 100% of all news is bullish no matter what.
We are almost to the point where earnings do not even matter - not there yet. QE pumped to 200B per month would do that - just have the Fed direct bid on every stock every day. They could levitate Dow to 30k even during a depression.
The economy is bad and getting worse. In fact it's so bad... I saw an homeless programmer on the street corner holding a sign saying he'd write code for bitcoins.
It's so bad that..... the number 1 book on the New York Times best seller list is 101 Hatian Mud Cookie Recipes for Americans.
It's so bad that..... Bill Gates switched to Linux.
It's so bad that ..... the former cast of Jersey Shore is now using the sun to get a tan.
It's so bad that..... everybody is actually looking forward to the high paying job of jury duty.
https://www.youtube.com/watch?v=oShTJ90fC34
Actually, I think the number one book is The Obamacare Survival Guide.
Yes. That's right, folks. Our healthcare is now something we have to 'survive'.
if every one expects PCEs to pull back on the margin in 2Q13 that would imply their own marginal reduction or a delay in expenditures be it hiring, inventory plans or fixed investment. so when will the Fed stop, taper or whatever their printing? those who are short duration are going to hurt.......
just saying
ponders why any company would invest when the rate of return for the same business risk as always continues to be rock bottom..defer the investment or give it back to shareholders to ...ummm....spend on planes, cars, houses, and ummm junk?
wait..the government (sheeple) own boeing, gm and FHFA already..
guess that just leaves junk..long wally world (and trade deficits) then..vendor financing of samsung and german cars? still we already know the emperors exercise pants are threadbare and social networking will soon contribute massive amounts to GDP..bleh