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Goldman Cuts Q1 GDP Forecast To 1.5% On Weaker Retail Sales; Half Of Goldman's Original Q1 GDP Forecast

Tyler Durden's picture


As we predicted when we highlighted the cumulative decline in the control retail sales group, it was only a matter of time before the banks started cutting their Q1 GDP forecasts. Sure enough, first it was Barclays trimming its Q1 GDP tracking forecast from 2.3% to 2.2%, and now it is Goldman's turn which just cut its latest Q1 GDP forecast from 1.7% to 1.5%.

From Goldman:

BOTTOM LINE: Although February retail sales rose a bit more than expected, negative back revisions more than offset the front-month surprise. Separately, initial and continuing jobless claims both fell more than expected. Import prices rose more than expected in February, but declined on a year-on-year basis. We reduced our Q1 GDP tracking estimate by two-tenths to 1.5%.


February retail sales rose 0.3% (vs. consensus +0.2%). Core retail sales?used by the Commerce Department to estimate the personal consumption expenditures (PCE) component of the GDP report?also rose 0.3% (vs. consensus +0.2%). By category, the strongest gains occurred in sporting goods (+2.5%) and non-store retailers (+1.2%), both bouncing back from weakness in January. (Non-store retailers mainly represent online shopping.) However, back-revisions to core retail sales in January (-0.3pp to -0.6%) and December (-0.2pp to +0.1%) were significant and widespread across categories, suggesting a trajectory of consumer spending in Q1 that was weaker than we anticipated.


We reduced our Q1 GDP tracking estimate by two-tenths to 1.5%.

As a reminder, Goldman's original Q1 GDP forecast, as recently as a month ago, was for a growth of 3%. How things change when weathermen, pardon economists, are shocked to find it gets cold in the winter...

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Thu, 03/13/2014 - 09:32 | 4542511 RevRex
RevRex's picture

Recovery Summer FIVE baby!



Socialism sure is good for a capitalist economy!

Thu, 03/13/2014 - 09:34 | 4542514 Winston Churchill
Winston Churchill's picture

Five or six ?

Easy to lose track waiting.

Thu, 03/13/2014 - 09:44 | 4542556 svayambhu108
svayambhu108's picture

Book the cooks...

Thu, 03/13/2014 - 09:53 | 4542581 HyBrasilian
HyBrasilian's picture

Pesky Weather!


Last winter it was too warm [so people didn't buy enough coats].

This winter it was too cold [so they stayed indoors & didn't make it to the mall to buy a coat].

Thu, 03/13/2014 - 10:15 | 4542669 Headbanger
Headbanger's picture

Hate to say it but for the record



Scroll down to just below the top chart for that statement. 


I feel so dirty now.  Go ahead and pelt me with down arrows....

Thu, 03/13/2014 - 10:24 | 4542716 Hohum
Hohum's picture


For a contrast and to find out how the world's weather's been doing, go to climatereanalyzer.org. 

P.S. Did Goddard mention the US had its warmest year ever in 2012?


Thu, 03/13/2014 - 10:33 | 4542756 Headbanger
Headbanger's picture

Yes as it shows right there on the top chart.

It just goes to show we can expect greater extremes in the weather due to climate change.

But what causes climate change is another matter.

But I think it's those aliens Chrarlie Sheen found in Mexico spewing nasty gases to make Earth hot enough for them!!

Thu, 03/13/2014 - 12:31 | 4543436 RevRex
RevRex's picture

Climate = THE WEATHER prevailing in an area.


Democrats are so fucking stupid they are just now realizing that weather changes!

Thu, 03/13/2014 - 09:33 | 4542513 Cognitive Dissonance
Cognitive Dissonance's picture

This is good news.....right? Or at least good bad news? I'm so confused. Guess my only option is to BTFATH.

Thu, 03/13/2014 - 10:11 | 4542649 asteroids
asteroids's picture

GDP is neither good or bad, it's just a useless indicator. You gotta fight the mind games and mind set the boyz want you to believe in.

Thu, 03/13/2014 - 12:23 | 4543381 John Law Lives
John Law Lives's picture

Maybe economists will come up with a "weather correction factor" that is additive to GDP.  They can just add back hundreds of billions of dollars to Q1 GDP for spending that "would" have happened if not for the cold weather.  Why not...


Thu, 03/13/2014 - 12:39 | 4543492 SokPOTUS
SokPOTUS's picture

If the weather sux; you can just stay in the house and substitute doing nothing versus doing something.

Weather Hedonics!


Brilliant!  JLL for the next Fed Chair!


Thu, 03/13/2014 - 12:46 | 4543526 John Law Lives
John Law Lives's picture

Thank you.  I thought someone might get a laugh out of it.  Then again, some economist might actually propose it.

Thu, 03/13/2014 - 09:37 | 4542524 drchris
drchris's picture

Of course! They have to lower it until it is a beat. Then the algos can ramp it. Don't you know how the economy works?

Thu, 03/13/2014 - 09:39 | 4542529 I Am Not a Copp...
I Am Not a Copper Top's picture


Thu, 03/13/2014 - 09:39 | 4542531 sudzee
sudzee's picture

This coming app should help US GDP.


Thu, 03/13/2014 - 09:40 | 4542536 youngman
youngman's picture

Umtil they found out how many people have actually PAID for their Obamacare..only then will we know what the GDP is....just to sign up and not pay is not good for the economy....but standard issue for the 51% on the government dole

Thu, 03/13/2014 - 09:52 | 4542582 Winston Churchill
Winston Churchill's picture

I read somewhere that insurance contracts entered into voluntarily have a 25% lapse rate in the

first three months.

I would expect 50%+ on Obozocare ones.

Thu, 03/13/2014 - 12:35 | 4543457 SokPOTUS
SokPOTUS's picture

...and just how many of the "enrollees" were actually trolls who went to the site, signed up under multiple aliases and 'selected' plans and abandoned the 'shopping cart' over and over again? 

I guarantee you that's occurred many times.

I'm Shocked. Shocked.  That some Eastern European hackers haven't taken that site down numerous times.

It must be far too profitable for them, so they leave it up and running.  ;)




Thu, 03/13/2014 - 09:41 | 4542540 jtz5
jtz5's picture

I don't understand how these GDP reductions are not market moving events.  The only time the market moves lower (in a normal market) is when there is a miss to expectations.  How can the market not move lower when you move the bar lower that those expectations are set against?  Total bs.

Thu, 03/13/2014 - 09:51 | 4542580 Rathmullan
Rathmullan's picture

More than offset by the bankers put. Every 100 bps off of 3.5% RGDP is worth $.5 trillion in QE. bankers have to make sure they get "richer than u" regardless of what the economy is doing.  

Thu, 03/13/2014 - 09:47 | 4542566 dizzyfingers
dizzyfingers's picture

Not in my lifetime....

Thu, 03/13/2014 - 09:49 | 4542569 dizzyfingers
dizzyfingers's picture

"Total bs."

So effing right.

Someone's full of hot air, it's not (most of) the folks here at ZH.

Thu, 03/13/2014 - 09:50 | 4542578 ptoemmes
ptoemmes's picture

Sporting Goods huh.  Snow shovels counted as hockey sticks no doubt.

Thu, 03/13/2014 - 09:53 | 4542586 Sudden Debt
Sudden Debt's picture

didn't they cut it like 20 times already?

Thu, 03/13/2014 - 10:02 | 4542613 Luckhasit
Luckhasit's picture

Yea.  But each revision gets them closer to what they really know where it's at. 

Thu, 03/13/2014 - 09:55 | 4542596 Spastica Rex
Spastica Rex's picture

At a quarterly growth rate of 1.5%, doesn't GDP double in about 12 years?

Thu, 03/13/2014 - 10:02 | 4542612 Luckhasit
Luckhasit's picture

I find it funny that anyone listens to Goldilocks anymore considering Ray Charles can predict a better GDP growth than these clowns.

Thu, 03/13/2014 - 10:45 | 4542827 Last of the Mid...
Last of the Middle Class's picture

If you forever revise the previous months figures down, then it's possible to have growth forever this month. To infinity, or zero, whichever comes first.

Thu, 03/13/2014 - 10:47 | 4542837 War_is_Peace
War_is_Peace's picture

If they calculated GDP using the same methods before the change to include "intagibles", would the economy have contracted?

Thu, 03/13/2014 - 12:49 | 4543559 BeerMe
BeerMe's picture

and if that is the case would it be -0.5 or -1.0?

Thu, 03/13/2014 - 10:47 | 4542839 Notsobadwlad
Notsobadwlad's picture

One has to wonder what purpose over-inflating initial estimates serves. Does it keep people ignorantly buying stocks? Does it help keep certain people in power? Que Bono?

Obviously it does much to discredit Goldman, but my guess is that they could care less.

Thu, 03/13/2014 - 11:14 | 4542986 Itchy and Scratchy
Itchy and Scratchy's picture

Buy stocks! Goldman is trying to cover!

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