Preliminary Q4 GDP Declines To 3.2% As Expected; Final 2013 GDP 1.9%, Down From 2.8% In 2012

Tyler Durden's picture

After the blistering final Q3 GDP print of 4.1% (to be revised far lower eventually), the preliminary Q4 GDP number had only one way to go, down - and sure enough it dropped to the expected 3.2% (well below Joe LaVorgna's 4.0% forecast), capping 2013 GDPat 1.9%, down solidly from the 2.8% growth recorded in 2012. "Assume a recovery..."

The good news: the composition of the preliminary Q4 GDP number was better, with inventories only accounting for 0.42% of the final 3.22% print, compared to 1.67% previously. In fact, for the first time since Q1, Personal Consumption was responsible for more than half of GDP growth, generating 2.26% of the annualized growth compared to 1.36% in Q3.Still on a quarterly basis, Personal Consumption of 3.3% missed expectations of a 3.7% growth, up from 2.0% - did the consumption surge already roll over before the quarter ended? Why yes, if one looks at abysmal holiday retail sales numbers.

The key contributors to consumption growth were Services, and specifically a jump in spending on housing and utilities (from -0.31% to 0.14%), as well as Food Services and Accommodations which rose from 0.02% to 0.43% annualized. Which was to be expected as inventory is being absorbed by consumption. The question is how much longer can consumers keep this behavior up with collapsing purchasing power.

The bad news, and here all "CapEx is growing" fans please look away, Fixed Investment tumbled from 0.89% to just 0.14% annualized, as investment across the board dipped but mostly in non-residential structures (down -0.03% from 0.35%) and a collapse in residential fixed investment from 0.31% to -0.32%.

Finally, net trade contributed a whopping 1.33% in GDP, the most since the 2.39% increase in Q2 2009. How much longer can the US continue boosting its GDP on the back of the shale boom, and declining imports, remains to be seen. However, just like the inventory build up now has to be soaked up, so the net trade boost is about to become a drag on growth, precisely in time for the consumer to also pull back. In other words, enjoy the Q4 GDP surge - it won't last into 2014.

Source: BEA

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buzzsaw99's picture

revenue is up and the deficit is down and you only get mugged if you go downtown [/country boy can survive]

idea_hamster's picture

Gold SPANK DOWN!

I could set my watch by it....

WarriorClass's picture

"The question is how much longer can consumers keep this behavior up with collapsing purchasing power.

The bad news, and here all "CapEx is growing" fans please look away, Fixed Investment tumbled from 0.89% to just 0.14% annualized, as investment across the board dipped but mostly in non-residential structures (down -0.03% from 0.35%) and a collapse in residential fixed investment from 0.31% to -0.32%."

When you know that consumer purchasing power is collapsing, why would any business increase investment in more production?

http://americandictators.blogspot.com/2014/01/economic-studies-even-you-...

SDShack's picture

Yep. In Q4, 0zer0care was just sticker shock. Now 0zer0care is changing to wallet shock. The only way consumer purchasing power will increase in that environment is if people stop paying any HC premiums, which will happen when their employer plans are cancelled this year as employers are forced to cut costs once again... courtesy of 0zer0care.

agent default's picture

Hey Tyler, post that COMEX reserves chart one more time.  Some people here need cheering up today.

I Am Not a Copper Top's picture

It was at the top of the down trend line, gonna take a while to get through it.  Relax and be thankful you will get another chance to get it cheaper.

Offthebeach's picture

Strip out of the annual % 1.8 GDP all the fracking boom and we are negitive.
Pull out Fed monthly bond buying and Fedgov Kenyan stimulants. ....

imapopulistnow's picture

Fracking is what saved the economy from slipping into a depression.

moneybots's picture

"Fracking is what saved the economy from slipping into a depression."

 

The economy IS in a depression.

syntaxterror's picture

Face it, your Central Planners suck at their jobs.

Sudden Debt's picture

Why not add prostitution and drugdealing to the GDP? That should do it...

JustObserving's picture

Isn't that the stock and trade of Wall Street?  Selling yourself for the drug called money.

mayhem_korner's picture

 

 

Businesses are "stockpiling" inventory.  Must be prepping for the collapse.

dobermangang's picture

Another average economic year under Obama.  Worse than last year, but better than next year... so average.

ejmoosa's picture

You could not have stated it any better.

gookempucky's picture

every flush of the toilet is in that equation

Fiat Burner's picture

Marketwatch: "U.S. sees second straight quarter of rapid growth."    What a fucking joke.

IridiumRebel's picture

I get tweets for news now and if you were to see how the media has been fawning over this number it's quite hilarious.

Ness.'s picture

'Real' final sales up 1.9% in 2013 vs 2.5% in 2012.  Going forward in reverse.

pavman's picture

You know, you add those two numbers together and we're doing 4.4% better than in 2011.  If that ain't progress...

papaswamp's picture

So how much was pumped into the economy in 2013..... and we get 1.9%.... a decline from 2012.

starman's picture

Is 75% off a discount or a deflation ?

pavman's picture

Speaking of 75% off...whatever hadppened to Zayres?!

BullyBearish's picture

Short-squeeze fueled rally today, plus PoMO is baaaaaaaaaaaaaaaaaaack with ~$5B tomorrow...

pachanguero's picture

here in Thailand the gold shops are full of Thai's bailing on the Baht and the bar girls are getting more humble.....

I'm pretty happy here waiting for the real meltdown called China!

NWO war to follow!

 

 

olenumbersix's picture

Well a bright spot to all the horse shit is gold falling annnnnnddd since I am a buyer or the yellow stuff I guess I'm off to the coin shop <thanks Ben>

highwaytoserfdom's picture

I am not a particularly religious man but really really try to hedge my bets Joe LaVorgna appears not  follow this path. Volker suggest using John Williams...     Joe that's  ~  -2%....  Isn't  fiat trust?  latin fiat ("let it become", "let it be done", "it shall be"

http://www.shadowstats.com/alternate_data/gross-domestic-product-charts

 

 

There are six things that the LORD strongly dislikes, seven that are an abomination to him: haughty eyes, a lying tongue, and hands that shed innocent blood, a heart that devises wicked plans, feet that make haste to run to evil, a false witness who breathes out lies, and one who sows discord among brothers.

Proverbs 6:16–19
Colonel Klink's picture

Wrong book, the banksters don't read that one!

moneybots's picture

"a false witness who breathes out lies"

 

They calll it real GDP when it isn't real at all.  Debt has exceeded GDP for decades, thus there is no real growth.

MickV's picture

If R&D and Government spending were not counted as "GDP" then GDP would be negative.

syntaxterror's picture

1% GPD growth in 2014 should correlate to at least a 15% S&P 500 bump.

moneybots's picture

"After the blistering final Q3 GDP print of 4.1% (to be revised far lower eventually)"

 

You mean the fake GDP of 4.1%, with the fake intanglibles added to artificially inflate the number?  What is the number after debt is subtracted- negative?

Theo P Neustic's picture

YOU: Why yes, if one looks at abysmal holiday retail sales numbers.LA TIMES:Good sales over the holiday season helped boost economic growth in the fourth quarter.So which is it?  It couldn't be that the media is the cheerleader? “Think of the press as a great keyboard on which the government can play.”-Joesph Gobbels

 

BullyBearish's picture

It never fails, the worse the news the more the market moves...UP

hotrod's picture

Isn't GDP INFLATED now due to the new calculations started last summer>????????  Seems GDP numbers are as distorted as inflaton, unemployment, housing etc. etc.