Overhyped Q1 GDP Grows By Only 2.5%, Biggest Miss To Expectations Since September 2011

Tyler Durden's picture

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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spastic_colon's picture

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.




flacon's picture

I'm sellling my puts today and buying calls. We'll be up, up, up and away next week! 

/ only half joking

Zer0head's picture

BLoomburp headline

Economy in U.S. Grows at Faster Pace as Consumers Boost Spending


and the fine print

Gross domestic product rose at a 2.5 percent annual rate, lower than forecast,




Fucking Plouffe has only been there for 10 minutes and already he is hard at work

TeamDepends's picture

They are little more than stock market cheerleaders.  Can't wait for the +$500 gold days to see how they try to spin it.

dontgoforit's picture

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.

King_of_simpletons's picture

It beat someone's expectations. That is all that matters.

SheepDog-One's picture

The problem with reading tea leaves is they're really just shit weeds.

Shit Weeds - YouTube

GetZeeGold's picture



I've changed brokers....and have gotten really good results with this guy.


Chuck Norris's picture

Did they forget to account for GM channel stuffing?  That ought to be good for 0.5%

Ned Zeppelin's picture

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.

SeattleBruce's picture

"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.


Groundhog Day's picture

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

First There Is A Mountain's picture

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.

Everybodys All American's picture

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.

Mr. Magoo's picture

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

moneybots's picture

They want the world to go bankrupt.  Co-ordinated government and monetary intervention.


SeattleBruce's picture

"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...

moneybots's picture

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.

First There Is A Mountain's picture

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.

Jacque Itch's picture

But... but... but... Zandi said it would be 4%.  Don't tell me he's wrong????

CrimsonAvenger's picture

I'll drink to that. Hell, these days I'll drink to anything.

dontgoforit's picture

Here's to 'non-sense.'  Cheers.

ejmoosa's picture

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.

Cursive's picture

These numbers aren't even relevant anymore.

fonzannoon's picture

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.


Bearwagon's picture

Buy even more crap ... give this man a cigar ...

fonzannoon's picture

If I owned trillions in UST's I'd be somewhat concerned. But that's just me.

onewayticket2's picture

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. 

SeattleBruce's picture

"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.

de3de8's picture

Yeah, and that's the mentality of the supposedly smart, no wonder we're in the mess we're in.

JPM Hater001's picture

These aren't the numbers you're looking for. (wave hand, invoke Jedi power)

Che Guevara is Dead's picture

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.

disabledvet's picture

"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?

MisterMousePotato's picture

"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.

forwardho's picture

< ------BLS numbers are propaganda.

<------ BLS numbers are true and accurate.

Cassandra Syndrome's picture

Anyone know what the "deflator" is?

madcows's picture

Flatulence.  Sorta like a big balloon deflating.

mayhem_korner's picture

Anyone know what the "deflator" is?


The 240-lb hooker who isn't the double-D model shown on the site you called.

duo's picture

everyone getting 29 hours a week of work to avoid Obamacare?

dontgoforit's picture

You can almost make a living working 3 jobs @ 20-25 hours each.

mayhem_korner's picture



Is Personal Consumption Expenditures gubspeak for "stockpiling"?

GetZeeGold's picture



I'm heading over to my lesbian friend's place later today.....what are you looking for? She has a government source.

azzhatter's picture

You're going to see Big sis?

mdtrader's picture

Don't worry they are changing how they calculate GDP soon. So this will be revised up to +4%.

Zer0head's picture

exactly - after July NetFlix, Twitter, FB etc will be part of GDP calc

SheepDog-One's picture

Real #? Certainly an actual negative. Who are they fooling here, themselves?


playnstocks's picture

Not to worry here comes the FED to blow this bubble bigger