4.2%-4.6% Second Half Growth? Good Luck

Tyler Durden's picture

It was only in March when the Fed revealed its latest downward revision to 2014 GDP growth, when it announced (in the same report as the infamous "dots") that its GDP forecast "central tendency" was reduced from 2.8-3.2% to 2.8-3.0%. This was when the world was still expecting a Q1 GDP somewhere around 1.5%-2.0% (when the full severity of snow in the winter wasn't yet apparent), instead of the current consensus forecast around -0.6%. Which, when combined with the current Q2 GDP tracking forecast somewhere around 3.5%, means that for the Fed's projection to be accurate, second half growth will have to average between 4.2% and 4.6%! Said otherwise, at its June 18 meeting expect the Fed - whose forecasting record is absolutely abysmal - to "significantly" lower its GDP forecast. Because what bonds really needed was another buying catalyst...

From Bank of America:

Forecasting change


When the Fed says policy is “data dependent,” what they really mean is “outlook dependent.” Only data that measurably change the Fed’s view on how the economy is evolving will elicit a change in their policy stance. The March economic projections look increasingly stale, with much lower growth, somewhat lower unemployment, and slightly lower inflation than forecasted. At the June meeting, we expect net dovish revisions in the FOMC forecasts.


Growth: goin’ down again


The unexpectedly soft 1Q GDP report has been followed by a fairly steady stream of further downward revisions to our 1Q tracking estimate. That estimate now stands at -0.7%. The first revision from the BEA will be released on May 29. If our estimate stands, real GDP must grow between 4.0% and 4.2% in each of the  next three quarters to reach the FOMC’s central tendency. If 2Q ends up at 3.4%, as we are currently tracking, then growth in the second half of 2014 will have to average between 4.2% and 4.6% to hit the FOMC’s current projection range. That is a very high hurdle indeed. Growth expectations for the rest of this year have rarely exceeded 3% among Fed officials who have recently expressed an opinion. In other words, the FOMC is quite likely to slice their growth expectations in June. Similar revisions occurred in each of the past five years.


* * *


All told, the FOMC may need to significantly revise down growth, perhaps modestly cut unemployment and leave inflation unchanged if they are to mark-to-market their forecasts at the June FOMC meeting. On net, this would be a modestly dovish shift, and not one to drive rates meaningfully higher.

Considering rates continue to dip and moments ago once again took out 2.50% to the downside (with the latest catalyst being frontrunning the Japanese GPIF Pension fund which appears set to buy US paper next in its scramble for yield), perhaps BofA may answer if the shift will drive rates meaningfully lower.

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SamAdams's picture

Unpossible...  The weather mods have created a drought and Commiefornia burns.

NoDebt's picture

"Critics of these numbers vastly underestimate the amount of political capital that has been invested in them during an election year."

We will see a 4+% print sometime just before the elections.  Downwardly revised later, of course.

onewayticket2's picture

no debt is on target....dont underestimate the full force of central planning....and the ONLY GOAL for the year is November.

Cognitive Dissonance's picture

The worse it gets the greater the hope that must be promoted in order to keep the mesmerized mice running on their exercise wheels.

That is precisely why it eventually all fails, because faith and belief inevitably crash head on into reality. One may suspend disbelief indefinitely while watching mass media, but just in time delivery of infinite resources is finite.

SamAdams's picture

I don't know, Christianity and the rest of book religions are still going strong...

Cognitive Dissonance's picture

On the contrary, many organized (Christian) religions are losing 'followers' in droves, a process that started decades ago here in the west.

Have you ever wondered why the Roman Catholic church suddenly decided that eating meat on Friday was no longer a sin, or that mass no longer needed to be recited in Latin? Forget the 'official' explanation. Even the church needs to conform to the mass consumer's desires if the collection plate is to be constantly replenished.

Headbanger's picture

Agree..  However...  The war soon upon us will drive the hordes back into the pews.


SamAdams's picture

Recession and war are windfalls for religion. 

lordylord's picture

Positive growth only means that the government isn't taxing and regulating enough.  Government won't be happy until they tax and regulate the economy into contraction.  Then they can blame everything on the free market.

dontgoforit's picture

Believers believe; non-believers don't.  Belevers care that non-belivers don't believe; non-believers don't care that believers believe.  Faith is a gift.  Religion is about an individual and his relationship to God.  Christian hope is that all come to believe and gain faith.  One only has to ask for it and they will receive it; however, with faith comes responsibility.  The responsibility of faithrul Christians is to help build the kingdom of God on earth.  How, by takng care of each other - not killing each other.

Cognitive Dissonance's picture

That is the theory. The practice is often different.

mayhem_korner's picture

On the contrary, many organized (Christian) religions are losing 'followers' in droves, a process that started decades ago here in the west.

Check your facts, CD. Christianity is growing world-wide.  Maybe not in your neck of the woods.  And don't confuse the dogma of the Roman Catholic church with what Christianity actually is about.  Those "false doctrines" have much to do with people falling away.

Cognitive Dissonance's picture

As I said....."a process that started decades ago here in the west."

And while I agree that Christianity is increasing in some un and underdeveloped countries, there is no wealth there (yet) to feed the RC church.

Ultimately it is about power and control. I have no doubt that many inside the RC hierarchy are sincere in their belief and their practice. But I subscribe to the "Watch what they do, not what they say" doctrine and there is much to learn about 'intent' by watching. The very fact that the RC still will not come totally clean about the decades (centuries) long practice of protecting their pedophiles speaks loud and clear, and is but one example.

Ignore what the Pope says and does. The Pope, like most leaders, is the salesman-in-chief and not the chief administrator. 

mayhem_korner's picture



CD, I may be misreading, but you seem to equate the RC church with Christianity.  Not sure why.

SamAdams's picture

I have to agree with you.  Unfortunately, the loss of religion has not been replaced by the sense of what God is and the fact that we all have the same creator.  Disunity, greed and lust have further degenerated the people.

All religions claim that their God created the universe.  Yet all religions claim monopoly on God.  This incompatible and should be a red flag to any thinking person.  Key word, thinking.  Most have never read the book, but rely on the priest to tell them what it says.


mayhem_korner's picture

Have you ever wondered why the Roman Catholic church suddenly decided that eating meat on Friday was no longer a sin


Never - always wondered why they thought it was - in clear contradiction to what is written.  But that, as well as holding services in Latin and countless other facets of RC dogma, are what obscures people's ability to see what the Christian faith is actually about.  I fear most don't know the difference and end up exercising their will based on what they have been told to think.

Cognitive Dissonance's picture

"I fear most don't know the difference and end up exercising their will based on what they have been told to think."

Power and control.

Long ago I learned there is a vast difference between believing in a "God' and believing in a 'religion'.

SamAdams's picture

Correct.  God is not a he, it is that which all exists.  It is the breath of life given to an otherwise lump of proteins.  It is the consciousness, awareness, intelligence present in all living things.  It is the matter and the anti-matter (energy).  God is the whole and energy in its purest form. 

God is not a bigot and does not "choose" one matter/people over another.  To say so is so completely ridiculous and unfounded. 

knukles's picture

I'll take God, Quantum Mechanics and UFO's over Propaganda any day

Headbanger's picture

Just don't get going on fucking stupid String Theory!

mayhem_korner's picture



Or evolution - perhaps the most unsubstantiated "book religion" of them all.

intotheblack's picture

Still going strong since classical antiquity. Faustian modernity has yet to produce a stable, sustainable system.

Dr. Engali's picture

Prosperity is just around the corner..... any minute now....... still waiting. 

knukles's picture

Oh, just down that flight of stairs...
    - M C Esher

Eyeroller's picture

So keep buying, sheeple!


BrosephStiglitz's picture

Ironically, at some point these assholes will correctly forecast growth just on blind luck, and then it will be "Great success! We told you so!"

See parallels with this:


mayhem_korner's picture



This is not about growth, it's about what the statist can fleece the masses into believing.

orangegeek's picture

4.2%-4.6% growth in food stamps for second half is more likely.

gatorengineer's picture

Well wait a second guys.... This is a mid term year....  4.3-4.6% from the ministry of truth is pretty likely..... reality, perhaps not.....

A friend of my wifes just moved into a 600k Home, on a 150k combined income.... I was a little surprised, he said he got a 5 year interest only ARM.....  3% for 5 and then it converts to a max of 7% on 30......  Liars loans, subprimes, and gimick mortgages are back.....  His bet is that his 600K is worth 800k or more in 5 years......

He's looking at BMW leases now.......

Cognitive Dissonance's picture

Moving on up to the East side.........

The Most Interesting Frog in the World's picture

Welcome to the Global Plantation my friends.  Something tells me if the Central Planners want 4.2% - 4.6% growth, they will get it.

This shit worked in the Soviet Union for a loooong time before it finally collapsed....

BrosephStiglitz's picture

You mean like.. since the 1980s?  Because that's when the central banks started dropping interest rates and they haven't looked back since.  30+ years of debt-inflated growth.

ptoemmes's picture

Gonna need a war or two for that....

Bold Eagle's picture

Withheld income and imployment taxes in May are running below last year's levels for the first time in FY2014. Say goodbye to Q2 growth.

101 years and counting's picture

the Fed has NEVER forecasted a recession.  nuff said.

Chippewa Partners's picture

There's room for growth in fire-fighting equipment.  California is a good market.


slightlyskeptical's picture

I think we at least come close to the targets.  We miss, miss, miss and the market rises steadily. Once we hit the targets it will be time for Goldilocks to celebrate. S&P 2400 by end of year.

starman's picture

Maybe they finally fogured out how to manipulate the weather?

SheepDog-One's picture

Same shit they've been saying every quarter for years now.....'Yea this quarter may suck, but next quarter will be awesome!'