This page has been archived and commenting is disabled.

When Bullish Myths Of US Growth Implode, Simply Hit The "Reset" Button As SocGen Just Did

Tyler Durden's picture


Not only would SocGen be shocked if the Fed made any significant policy shift this week, they appear to be finding "belief" in a growth renaissance hard to sustain in light of the dismal reality that keeps getting in the way of 'faith'. Undertaking any policy shifts at this meeting would be akin to driving at night with no headlights, they note, taking the opportunity to slash Q3 and Q4 GDP expectations - pushing off hope for any Taper announcement until late Q1 at its earliest. Of course, they remain "fundamentally bullish" on US growth (or every assumption about the world would implode) but the mid-year inflection point they hoped for appears to be further into the future than they hoped.


Via SocGen,

We expect no material changes in the FOMC statement this week, with odds of the Fed either increasing or decreasing the pace of purchases very close to zero. The economy is currently going through a period of uncertainty following the government shutdown, and has yet to digest fully the impact of higher rates. Therefore, we expect the Fed to take this opportunity to take stock of recent events, but opt to wait for more clarity before making any policy adjustments. We are also taking this opportunity to update our own economic forecasts. By our estimates, Q3 GDP is currently tracking at 2.3%, marginally lower than our published forecast of 3.0%. We are also downgrading our Q4 projection from 3.6% to 3.0% to account for the negative effects of the government shutdown. This would put the full- year growth rate at 2.2% on Q4/Q4 basis. We continue to look for a meaningful acceleration next year to 3.2%. We believe that these forecasts are consistent with a tapering announcement in late Q1.


Undertaking any policy shifts at this meeting would be akin to driving at night with no headlights. Since the September FOMC meeting, visibility on the outlook has not improved at all and, if anything, has gotten worse. The Fed’s concerns about fiscal policy have materialized, though the impact on growth remains uncertain. And, although financial conditions are easing again (see chart below), the net effect is still one of reduced visibility.


In this context, it would be far more prudent to wait for more clarity on the economic outlook. This is precisely what we expect the FOMC to do, not just this week, but also at the December meeting. In the meantime, the Fed will likely use the next two meetings as an opportunity to take stock of recent events and evaluate their impact on the economy.


Hitting a reset button on our economic forecasts


We also take the opportunity to update our GDP projections to account for recent events. Data available to date suggests that the economy clocked in a 2.3% annualized growth rate in Q3, i.e. marginally lower than our published forecast of 3%. The chart below shows a breakdown of contributions to growth by sector. While nearly every sector of the economy has shown some deceleration vs. Q2, consumer demand is the major reason for our revision, with real consumption now assumed to have grown at just 1.5% (today’s retail sales will be the next key data input into this estimate). We are also revising down our Q4 forecast from 3.6% to 3.0% to account for the effects of the government shutdown and for the slightly weaker momentum coming out of Q3.



We remain fundamentally bullish on the US growth. Since the start of the year, we have been calling for an inflection point around mid-year as the last of the headwinds began to dissipate. While the government shutdown has prolonged the period of fiscal uncertainty, the reality remains that new austerity – above and beyond what was legislated at the start of this year – is quite unlikely. Policy uncertainty is also on a downtrend, notwithstanding recent spike. And, housing should continue to be supported by declining real mortgage rates.

So in summary, our bullish hope based forecasts missed by a mile, so we are taking a hatchet to them, time-shifting them, and hope that we will be right again at some point in the future...


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 10/29/2013 - 17:45 | Link to Comment surf0766
surf0766's picture

Who in the F is still talking tapper. Like they will ever stop printing. The end game has arrived. They can never tapper and they know it.


Tue, 10/29/2013 - 17:54 | Link to Comment knukles
knukles's picture

Hey, they gotta talk about sumptin' to justify generating the trades to generate the commissions with the institutional accounts.
The talking heads gotta talk about sumptin' so they parrot the street talkin' about sumptin' so thay got sumptin' to talk about.

Moreover, if I were Janet (No giggles guys and gals, this is serious) I sure as hell would want exactly as is being ballooned here.
Reset closer to reality to give it some time to breathe, set the dials back to no news is good news...
PLUS....  Don't forget that Janet in her acceptance speech did make it quite clear that while it is good to have a diversity (pun?) of opinion within, there should be just One Voice externally. 
Which is the way it should be.
We've frankly had more than enough of this absolute clusterfuck of every person saying what they will about everything under the sun and creating additional mass confusion of top of real mass confusion because one mass confusion is more than enough to be confused about without additional mass confusion confusing the masses en-mass.

Tue, 10/29/2013 - 17:56 | Link to Comment King_of_simpletons
King_of_simpletons's picture

QE is good. Fatter the stimulus, greater it benefits man-kind. More debt is great !

Tue, 10/29/2013 - 18:32 | Link to Comment prains
prains's picture

grease it up, pucker it comes the tapper!!

Tue, 10/29/2013 - 18:00 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

They can't "tapper"?  Sure they can: Double tap.  Tap, tap.  You're dead.

It'll happen.  Get ready to duck 'sideways'.

Tue, 10/29/2013 - 18:03 | Link to Comment SAT 800
SAT 800's picture

Hope is good. But Silver is better.

Tue, 10/29/2013 - 20:34 | Link to Comment tarsubil
tarsubil's picture

Tapper? I hardly even knew her.

Tue, 10/29/2013 - 17:54 | Link to Comment stinkhammer
stinkhammer's picture

we care about nothing!

Tue, 10/29/2013 - 17:55 | Link to Comment OwnSilverPlayMusic
OwnSilverPlayMusic's picture

Let's see S & P 500 up 21% since Jan 1st.  GDP growing at 2% makes sense to me.

Tue, 10/29/2013 - 17:56 | Link to Comment Rainman
Rainman's picture

Some people who are way off projection blame the weather. Others blame gubmint shutdowns...ho hum

Tue, 10/29/2013 - 18:06 | Link to Comment NotApplicable
NotApplicable's picture

Weather? I think you mean "climate change."

Eagerly awaiting the day the Weather Channel changes their name.

Tue, 10/29/2013 - 18:43 | Link to Comment knukles
knukles's picture

"The Global Warming Channel"?

And here's Biiiiig Al!

Hi everybody and just remember, it's gonna be really hot and shitty out there today!  Hey, this is not a test. This is rock and roll. Time to rock it from the delta to the DMZ! Is that me, or does that sound like an Elvis Presley movie? Viva Da Nang. Oh, viva, Da Nang. Da Nang me, Da Nang me. Why don't they get a rope and hang me? Hey, is it a little too early for being that loud? Hey, too late. It's 0600 What's the "0" stand for? Oh, my God, it's early. Speaking of early, how about that Cro-Magnon, Marty Dreiwitz? Thank you, Marty, for "silky-smooth sound." Make me sound like Peggy Lee. Freddy and the Dreamers! Wrong speed. We've got it on the wrong speed. For those of you recovering from a hangover, that's gonna sound just right. Let's put her right back down. Let's try it a little faster, see if that picks it up a little bit. Those pilots are going, "I really like the music. I really like the music. I really like the music." Oh, it's still a bad song. Hey, wait a minute. Let's try something. Let's play this backwards and see if it gets any better. Freddy is a devil. Freddy is a devil. Picture a man going on a journey beyond sight and sound. He's left Crete. He's entered the demilitarized zone. All right. Hey, what is this "demilitarized zone"? What do they mean, "police action"? Sounds like a couple of cops in Brooklyn going, "You know, she looks pretty to me." Hey, whatever it is, I like it because it gets you on your toes better than a strong cup of cappuccino. What is a demilitarized zone? Sounds like something out of The Wizard of Oz, Oh, no, don't go in there. Oh-we-oh Ho Chi'Minh Oh, look, you've landed in Saigon. You're among the little people now. We represent the ARVN Army The ARVN Army Oh, no! Follow the Ho Chi Minh Trail. Follow the Ho Chi Minh Trail. "Oh, I'll get you, my pretty!" Oh, my God. It's the wicked witch of the north. It's Hanoi Hanna! "Now, little GI, you and your little 'tune-ooh' too!" "Oh, Adrian. Adrian. What are you doing, Adrian?" Oh, Hanna, you slut. You've been down on everything but the Titanic. Stop it right now. Hey, uh, hi. Can you help me? What's your name? "My name's Roosevelt E. Roosevelt." Roosevelt, what town are you stationed in?. "I'm stationed in Poontang." Well, thank you, Roosevelt. What's the weather like out there? "It's hot. Damn hot! Real hot! Hottest things is my shorts. I could cook things in it. A little crotch pot cooking." Well, can you tell me what it feels like. "Fool, it's hot! I told you again! Were you born on the sun? It's damn hot! I saw - It's so damn hot, I saw little guys, their orange robes burst into flames. It's that hot! Do you know what I'm talking about." What do you think it's going to be like tonight? "It's gonna be hot and wet! That's nice if you're with a lady, but it ain't no good if you're in the jungle." Thank you, Roosevelt. Here's a song coming your way right now. "Nowhere To Run To" by Martha and the Vandellas. Yes! Hey, you know what I mean! Too much?

Tue, 10/29/2013 - 18:05 | Link to Comment Devotional
Devotional's picture

all we can do as average citizens is to protect ourselves and family too. I live in Portugal, we have no gun rights here. Now the government wants to limit citizens to owning a maximum of 2 dogs per household. Imagine that huh? It's the endgame at all levels, government is out of control, Central Banks are out of control and citizens rising to the calling of the sheep.

Tue, 10/29/2013 - 19:20 | Link to Comment Clowns on Acid
Clowns on Acid's picture

What about the number of chickens ?

Tue, 10/29/2013 - 19:25 | Link to Comment Devotional
Devotional's picture

Replace sheep with chickens then

Tue, 10/29/2013 - 18:08 | Link to Comment adr
adr's picture

2009 - we are bullish on US growth next year

2010 - sorry, we meant we are bullish on growth next year

2011 - sorry, next year will show lift off in the us economy

2012 - we were wrong again but all signs point to growth

2013 - a record stock market rally couldn't happen without record growth prospects on the horizon

 Are we really supposed to believe 2014 is going to be any different?

Tue, 10/29/2013 - 18:20 | Link to Comment Oldwood
Oldwood's picture

Its like the carrot being dangled in front of the mule to keep him moving forward. It always seemed silly as you would assume the stupid animal would eventually figure it out. I guess the lust for that carrot is great because the lust for returns from investing is easily outweighing any concern about actual lack of growth. Yesterday is gone and there is only tomorrow. Whether we had growth yesterday is irrelevant as the "potential" for growth tomorrow is all that matters. "Hope" is a state of mind that is driven much more by want than reality. As long as gov keeping pouring out cash and the rest of us will still get up and go to work tomorrow for that same old piece of paper WE KNOW is worth less everyday, the game goes on. We all know, really, that reality comes when we actually say it does, right? Sure there are lots of posters here talking collapse and such, but we all know it will be hell (more so for some than others). Most are in someway staying afloat in this mess, some profitting quite well in the madness, so I think it is US who will ultimately have to decide. Pretty fucking scary if you ask me. When the founding fathers stepped out and pledged their lives and property to revolt against England, it took some balls. I haven't seen those yet, on myself or anyone else really. When poor people have given up on the dream of actually getting ahead through hard work and effort, they buy lotto. The wealthier buy stocks and bonds and other financial "devices" of gaming. I suppose cannibals would have russian roulette as their before dinner games too. In this new world paradigm, some must perish in order that others can eat, so it might as well be at the toss of the dice.

Tue, 10/29/2013 - 18:22 | Link to Comment 999.9
999.9's picture

All of us ZHers discussing about more or less dovishness of next Fed Chairman, but really, do you think it is their decision? They are just spokesmen of other people's will. The same with Obama, these are the faces that we see but the real power is behind the curtain. This is not about Yellen or Bernanke.

Tue, 10/29/2013 - 18:32 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

So basically, they are saying:

"Sorry, we drank the coolaide.   Recalculating......Recalculating......Recalculating....."

Tue, 10/29/2013 - 18:41 | Link to Comment Goldilocks
Tue, 10/29/2013 - 18:51 | Link to Comment Kina
Kina's picture

Has there and is there any growth at all in Europe or the USA these past few years? Honestly? 

I think for economies that only hitherto grew on credit growth, and as banks are no longer lending, corporations no longer expanding and employing.....there is not growth there has to be GDP growth-deceleration to 0 and then shrinkage once other natioin stimulus efforst cease or become less effective.


There has been a global GDP shrinkage over the past few years, covered up by China and other artificial stimulus, fake statistics, and money that has gone nowhere good. Economies shrink, real unmployment continues to grow, as money printing creates inflation in the things we need. Not a good combination.


China is going to bite the bullet before the US and Europe out of the interests of the Communist leaders wanting to keep control, inflation in essential goods and services is going to stop them in their tracks...unless they look for a China spring. 


For too long credit growth went into things that didn't produce wealth, didn't pay it back...just tossing money down a well.

Tue, 10/29/2013 - 18:57 | Link to Comment LooseLee
LooseLee's picture

These charlatans just won't give up will they? The credit super-cycle has peaked----and it is only DOWNHILL from here. How much do these morons make for their financial prophecies? Much, too much, I'm convinced. Better to train a monkey to be a pollyanna....

Tue, 10/29/2013 - 18:59 | Link to Comment kurzdump
kurzdump's picture

Sometimes its better to keep the machine running while fixing bugs. Any reset would cause the system to halt while booting. Our economy however is totally beyond all repair. It doesnt matter if we fix bugs or reset. We will see a black screen soon enough - in any case.

Tue, 10/29/2013 - 19:05 | Link to Comment Kina
Kina's picture



USA blue screen of death...


please contact your system administrator...



Tue, 10/29/2013 - 19:25 | Link to Comment John Law Lives
John Law Lives's picture

"By our estimates, Q3 GDP is currently tracking at 2.3%, marginally lower than our published forecast of 3.0%."

Wow.  Were these guys math majors?  Since when is a revision from 3% growth to 2.3% growth a MARGINAL revision.  Dropping estimates from 3% to 2.3% is a decline of ~23%.

((3-2.3)/3)x100% = 23.3% decline.


Tue, 10/29/2013 - 19:23 | Link to Comment Clowns on Acid
Clowns on Acid's picture

Soc Gen - who has been bankrupt 2 or 3 times since 2000, baile dout by the Gov't of France, then by the ECB and in 2010 by the US Federal Reserve banks currency swaps .... is just publishing their personal experience.....

"We (Soc Gen)will get bailed out, the US will continue to be bailed out by printed money out of thin air." "We have experinec in this matter.... listen to us".

Tue, 10/29/2013 - 22:04 | Link to Comment Notarocketscientist
Notarocketscientist's picture

Didn't people get the message last month?  Bernanke basically said - he can NEVER taper. 

5 years of this shit and there is no recovery - yet people think if we just do a little bit more there will be a recovery - then the Fed can taper?

How gullible can people be?  

I tire of having the same conversations with people who believe this recovery BS.  I thought when Bernanke took the taper off the table people would see the light - but NOPE - just hit reset and say 'taper is back on the table in Q1 2014 and they believe it. 

One would think people would see what is playing out - the Fed is cornered - they will print until the USD explodes.  Bernanke has thrown them a bone of insider info - he has said 'we can never taper - we will continue to print as long as we can - now run off and buy as much PM as you can afford)

Most are choosing to ignore this (there is only one person I have spoken to who has had an epiphany over this - he is now buying gold)


Do NOT follow this link or you will be banned from the site!