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In Repeat Of Its Q1 GDP Forecast Farce, Goldman Launches Its Q2 GDP Prediction At 3.0%

Tyler Durden's picture




 

It was back on January 30 that the Goldman economist team made its first downward revision to what then was a 3.0% forecast to Q1 GDP. Exactly three months later we find that Goldman was off by only 97% when Q1 GDP printed at 0.1%. That's ok - they are economists, and thus are expected to be massively, epically wrong. So here is Goldman with its first "tracking forecast" for Q2 GDP. It is.... drumroll.... 3.0%. How long until this number too is lowered to 0.1% (to be sure, all that rain in New York City has to detract at least 1%-1.5% from Q2 GDP right?).

From Goldman:

BOTOM LINE: GDP rose much less than expected in Q1, although the weak print appears to be largely due to one-off factors. The April ADP employment report was roughly in line with expectations. Employment costs rose less than expected in Q1, pointing to subdued wage pressures. We are starting our Q2 GDP tracking estimate at 3.0%.

GDP (advance) +0.1% for Q1 vs. GS 1.0%, median forecast 1.2%
Personal consumption +3.0% for Q1 vs. GS +2.3%, median forecast +2.0%
ADP employment +220k for April vs. GS +220k, median forecast +210k
Employment cost index +0.3% for Q1 vs. median forecast +0.5%.

MAIN POINTS:

1. GDP grew only 0.1% in Q1 (vs. consensus +1.2%). Personal consumption rose 3.0%, although the increase appears to have been largely due to special factors in services spending, including a weather boost to utilities and Affordable Care Act-related healthcare spending. Outside of personal consumption, business fixed investment disappointed our expectations, falling 2.1%. Equipment investment was particularly weak (-5.5%). Exports fell 7.6%, with net exports subtracting eight-tenths from growth. Residential investment declined 5.7%, reflecting weaker housing data. As we expected, inventory accumulation returned to a more normal level ($87bn), subtracting a further six-tenths from growth. Government spending was roughly flat on the quarter. Final sales to domestic purchasers—excluding the effect of inventories and net exports—rose 1.5%. Overall, we do not see Q1 growth as representative of the underlying trend, in light of weather distortions, the out-sized subtraction from net exports, and the drag from inventory normalization.

2. ADP employment increased 220k in April (vs. consensus 210k). The distribution of job gains by industry was similar to that seen in recent months, with the largest job gains in professional and business service jobs (+77k) and trade, transportation, and utilities (+34k). Construction employment added 19k, while manufacturing employment was a bit soft at +1k . March ADP employment growth was revised up by 18k to 209k. ADP has yet to prove itself as a reliable predictor of nonfarm payroll job growth, following methodological revisions in 2012.

3. The employment cost index—which measures total compensation costs—rose 0.3% at a quarterly rate in Q1 (vs. consensus +0.5%), a slowdown from +0.5% in Q4. On an unrounded basis, the gain was the slowest since 2009Q2. Wages and salaries also grew 0.3% in Q1 (vs. +0.5% in Q4) and an even slower 0.2% in the private sector. On an unrounded basis, wage and salary growth was the slowest in the 32-year history of the series. Benefit costs rose 0.4% in Q1 (vs. +0.6% in Q4). On a year-over-year basis, compensation costs for all civilian workers rose 1.8% and wages and salaries rose 1.7%. Overall, the report continues to suggest subdued inflationary pressure from the wage side.

4. We are starting our Q2 GDP tracking estimate at 3.0%.

 

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Wed, 04/30/2014 - 09:46 | 4711689 MFL8240
MFL8240's picture

I dont know of anyone who believes anything this group of jokers says!

Wed, 04/30/2014 - 09:50 | 4711698 Mark Carney
Mark Carney's picture

A sign of things to come.

 

Gold price shock will come soon enough when the bigs start taking hits.........LIKE NOW!

Barrick Gold Corp (ABX.TO:Quote) reported a dramatic drop in first-quarter earnings on Wednesday 

 

First-quarter profit at Barrick Gold shrank 90 per cent, underscoring the tough environment for world’s largest gold producer following the end of merger talkswith its closest rival.

Wed, 04/30/2014 - 09:51 | 4711722 Pool Shark
Pool Shark's picture

 

 

Definition of Goldman's GDP Forecast:

"A wild-assed guess, carried out to two decimal places."

 

 

Wed, 04/30/2014 - 09:51 | 4711727 Sudden Debt
Sudden Debt's picture

Goldman's predictions are like that wheel of fortune guessing

 

http://youtu.be/7Zj1WGIKNA4

 

Wed, 04/30/2014 - 10:38 | 4711944 Richard Chesler
Richard Chesler's picture

A broken clock is right twice a day.

 

Wed, 04/30/2014 - 11:09 | 4712109 InvestmentMind
InvestmentMind's picture

They were just saying to sell bonds too ... to them.

Goldman Sachs Strongly Suggests Clients Sell Them Their Treasury Bonds

http://www.zerohedge.com/news/2014-04-28/goldman-sachs-strongly-suggests...

 

Goldman: Doing God's work since 1869.

 

 

 

 

Wed, 04/30/2014 - 09:55 | 4711752 DeadFred
DeadFred's picture

It's sad that real electrons had to lose their lives in order for such drivel to be sent out to brain dead zombies. Or because we had to respond to it.

Wed, 04/30/2014 - 10:39 | 4711949 Dollarmedes
Dollarmedes's picture

One thing no economist is predicting: it will be hot and sunny in summer. 'Cause that would be crazy talk.

Wed, 04/30/2014 - 09:48 | 4711701 Sudden Debt
Sudden Debt's picture

I've heard their poop smells like sandlewood!

Wed, 04/30/2014 - 09:46 | 4711693 Sudden Debt
Sudden Debt's picture

hmmm...

so next week it's, 0,3% and in 2 weeks it'll be down 3%!

 

Wed, 04/30/2014 - 09:47 | 4711696 A_Nejad
A_Nejad's picture

Stupid bitcheZ!!

Wed, 04/30/2014 - 09:48 | 4711704 Stoploss
Stoploss's picture

LOL!!!

Wed, 04/30/2014 - 09:51 | 4711721 Dr. Engali
Dr. Engali's picture

Lol....Chicago PMI come in at 63.. Old Rham is getting bold with his fudged numbers.

 

Oh yead Fuck you squid. Q2 GDP will come in below 1.5%

Wed, 04/30/2014 - 09:55 | 4711746 firstdivision
firstdivision's picture

Average Citizen:  Hey, the Chicago PMI number is out.  What's PMI, and are we talking about the band or the city?  Nevermind, don't care, Dancing with the Stars is on.

Wed, 04/30/2014 - 09:53 | 4711738 BullyBearish
BullyBearish's picture

Part of the FED's strategy to:

 

                    Stair

                              Step

                                         Down

Wed, 04/30/2014 - 09:54 | 4711741 JenkinsLane
JenkinsLane's picture

I want to work for The Goldman Sachs.

Wed, 04/30/2014 - 10:01 | 4711782 gatorengineer
gatorengineer's picture

Gas starting to approach $4 in Pennsy, and is rising nicely against falling oil.  Should do wonders for the economy....

 

Now Obama needs to approve a few LNG export terminals and get nat gas to $6 or $7 and the frog should be nicely medium rare, coal killed off, and $300 power bills for consumers.

Wed, 04/30/2014 - 10:19 | 4711856 Bernoulli
Bernoulli's picture

Prediction is very difficult, especially about the future.


Wed, 04/30/2014 - 11:11 | 4712112 B2u
B2u's picture

Goldman would get predictions wrong about the past...

Wed, 04/30/2014 - 13:16 | 4712726 AndrewJacksonsGhost
AndrewJacksonsGhost's picture

When does unexpectedly unexpected become expected? Double negatives equal a positve right?

 

Just think...if they did not implement those changes to the GDP calculations, we could have had a recession declaration.....phew, close one!

Wed, 04/30/2014 - 13:25 | 4712733 AndrewJacksonsGhost
AndrewJacksonsGhost's picture

Wait a minute, they usually take a few months to make adjustments, maybe in June we will hear it was actually a .5% drop to GDP.

Wed, 04/30/2014 - 14:37 | 4713144 shankster
shankster's picture

Al Gore eats hamburgers, big ones too. And he has a huge carbon foot print just like Obama.

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