US Economy Shrank By 1% In The First Quarter: First Contraction Since 2011

Tyler Durden's picture


Weather 1 - Quantitative Easing 0.

Spot on the chart below just how high the culmination of over $1 trillion in QE3 proceeds "pushed" the US economy.

Joking aside, while the realization that nobody can fight the Fed except a cold weather front, is quite profound, in the first quarter GDP "grew" by a revised -1.0%, down from the +0.1% first estimate, and well below the -0.5%  expected, confirming that while economists may suck as economists, they are absolutely horrible as weathermen. This was the worst print since the -1.3% recorded in Q1 2011.

Bottom line: for whatever reason, in Q1 the US economy contracted not only for the first time in three years, but at the fastest pace since Q1 of 2011. It probably snowed then too.

The breakdown by components is as follows:

Some highlights:

  • Personal consumption was largely unchanged at 2.09% from 2.04% in the first estimate and down from 2.22% in Q4. Considering the US consumer savings rate has tumbled to post crisis lows at the end of Q1, don't expect much upside from this number.
  • Fixed investment also was largely unchanged, subtracting another 0.36% from growth, a little less than the -0.44% in the first estimate and well below the 0.43% contribution in Q4.
  • Net trade, or the combination of exports and imports, declined from
    -0.83% to -0.95%, far below the positive boost of 0.99% in Q4.
  • The biggest hit was in the change in private inventories, which tumbled from -0.57% in the first revision to a whopping -1.62%: the biggest contraction in the series since the revised -2.0% print recorded in Q4 2012.
  • Finally, government subtracted another -0.15% from Q1 growth, more than the -0.09% initially expected.

So there you have the priced to perfection New Normal growth (inclusive of "harsh weather", which obviously has to be excluded for non-GAAP GDP purposes), which also now means that in the rest of the year quarterly GDP miraculously has to grow at just shy of 5% in the second half for the Fed to hit the "central tendency" target of 2.8%-3.0%.

And now we await for stocks to soar on this latest empirical proof that central planning does not work for anyone but the 1%.

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Thu, 05/29/2014 - 08:50 | 4805047 orangegeek
orangegeek's picture

Giddy Up!!!!!


Get the Orville Redenbacher and let's watch the markets go higher!!!!!

Thu, 05/29/2014 - 08:51 | 4805050 CH1
CH1's picture

Quick, break some windows!!!

Thu, 05/29/2014 - 08:53 | 4805061 Headbanger
Headbanger's picture

Ban weather!

Thu, 05/29/2014 - 08:56 | 4805073 Pool Shark
Thu, 05/29/2014 - 08:59 | 4805084 THX 1178
THX 1178's picture

Next up "Belgium" puts through 140 billion in buy orders on the S&P.

Thu, 05/29/2014 - 09:14 | 4805148 Chris Jusset
Chris Jusset's picture

Time to lower interest rates!  Oh, wait ....

Thu, 05/29/2014 - 09:16 | 4805160 clooney_art
clooney_art's picture

Begs MOAR QE !

Thu, 05/29/2014 - 09:19 | 4805178 max2205
max2205's picture

Get to work Federal Government

Thu, 05/29/2014 - 09:21 | 4805198 Tabarnaque
Tabarnaque's picture

Stagflation bitchezzzz!

Thu, 05/29/2014 - 09:51 | 4805340 MillionDollarBonus_
MillionDollarBonus_'s picture

Look at these zerohedge goblins cheer with glee as our economy falters. May I remind the children on this blog that this is reality and it is very serious. Our government has failed to invest enough in our economy and we as the citizens bare responsibility for that. The mature people are trying to figure out where our government can invest in order to help out economy recover from this setback, while immature, narcissistic ZH day traders gloat over being “right”. 

Thu, 05/29/2014 - 09:53 | 4805349 TheFourthStooge-ing
TheFourthStooge-ing's picture

What we need right now are trained and accredited experts!

Thu, 05/29/2014 - 09:56 | 4805364 eatthebanksters
eatthebanksters's picture

It's all because of bad Syria, the Ukraine, Afghanistan.....

Thu, 05/29/2014 - 11:06 | 4805649 SoberOne
SoberOne's picture

QE is criminal. Prosecute the perps and quit central planning.  This is deliberate. 

Thu, 05/29/2014 - 11:50 | 4805814 DirtyWilly
DirtyWilly's picture

The reason ZH'ers cheer this isn't because they think they're right.  They all think the same bullshit that once the economy goes into super depression gold and guns will be worth millions.  One ounce of gold will buy them the entire state of Rhode Island.  This is why they're so hostile to other asset classes, we all know it.  It's never going to happen "stackers", stop listening to Schiff and Jickards, gold is not going to be worth $100,000's.  And the irony here, even if it was all you did was preserve your wealth jackasses!  lol  I'm going to enjoy all of you being "right" about the economy, because the other half of your formula is completely wrong, good luck.

Thu, 05/29/2014 - 12:03 | 4805866 dontgoforit
dontgoforit's picture

If loving the QE is wrong, I don't want to be right.

Fri, 05/30/2014 - 12:02 | 4809710 papaclop
papaclop's picture

Don't have any gold huh? You'll probably be all right with cash. You may want to pick up a wheelbarrow or two. Good luck,big guy.

Thu, 05/29/2014 - 10:14 | 4805447 novictim
novictim's picture

With degrees and everything!

Thu, 05/29/2014 - 10:02 | 4805393 Tabarnaque
Tabarnaque's picture

There we go. So according to MDB we need even bigger government to spend more money that we don't have. Oh yeah, that reminds me that the reason why durable goods orders were up yesterday is because the war mongers in wdc just bought another $18 billons worth of nuclear submarines! I love how this destructive government invests tax payers money. This is really a great advance for society. I mean thinks about all the good things you can do with 10 nuclear submarines!!! I guess that this is what MDB calls development!

Thu, 05/29/2014 - 10:23 | 4805485 Dr. Richard Head
Dr. Richard Head's picture

I can compare the Federal Government with a spendthrift wife who truly believes she saved money by purchasing 2 dresses at $75 instead of 1 dress at $50, because the second dress was half off.  Fucking instanity. 

Is it really cheaper to keep her?

Thu, 05/29/2014 - 11:16 | 4805705 stonecoldbrokei...
stonecoldbrokeinthemiddleofthewinter's picture

One consideration is her taste in dresses....

Thu, 05/29/2014 - 10:13 | 4805437 novictim
novictim's picture

Million, you assume that the asshats here on ZeroHedge are US citizens. More than a few of the contributors are Russians.

Thu, 05/29/2014 - 10:13 | 4805438 novictim
novictim's picture

Million, you assume that the asshats here on ZeroHedge are US citizens. More than a few of the contributors are Russians.

Thu, 05/29/2014 - 10:32 | 4805514 venturen
venturen's picture

MDB you are such a moron! The government has failed to invest? Is that theory on why all socialist countries fail? The economy is going down...because the invest too many overpaid workers and too many projects while taking too much of the people's money! I guess you can't understand anything than that troll's Krugman...NYT communist manifesto of spend more regardless of merit! Hey can we build another field of wind turbines or solar panels that operate 25% of the time. Or maybe you can suggest another soon to fail battery or solar panel company? 

Thu, 05/29/2014 - 10:40 | 4805541 fingulas
fingulas's picture

You are the most consistent troll.  My hat's off to being able to provoke response after response.  LOL.

Thu, 05/29/2014 - 12:17 | 4805915 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

No kidding.  Over and over again he fools you people.  

Thu, 05/29/2014 - 10:58 | 4805608 Bernoulli
Bernoulli's picture

MDB: you crack me up.

indeed, it's very serious.

But who exactly do you claim "bares" the responsibility for that?!?! "WE AS CITIZENS"?!?!? wtf.

you can't be real. I think you are an algo. An algo that was programmed to never use the word "bear". not even as a verb.

Thu, 05/29/2014 - 11:09 | 4805666 Anybody
Anybody's picture

I think he baring it all on his web site.

Thu, 05/29/2014 - 11:03 | 4805629 BrigstockBoy
BrigstockBoy's picture

Were you "bare" when you typed this MDB? Mind your naked shorts! ;)

Thu, 05/29/2014 - 11:11 | 4805670 dontgoforit
dontgoforit's picture

MDB, are you a Bildeberger?  No, well, maybe a Hamburger?

Thu, 05/29/2014 - 11:09 | 4805665 Singelguy
Singelguy's picture

MDB, you fail to appreciate that the corruption, fraud, and paralysis in Washington is so bad that it can no longer be fixed. The only way this is going to be fixed is with another major crisis. That seems to be the only thing that gets their asses in gear. If you have another viable solution, Let's hear it. I would be the first one to support it. However, with half the population on some kind of government assistance, the politicians seeking re-election in November will only vote to spend more money they don't have. The dollar needs to crash to wake those idiots up. More debt, more regulations, and higher taxes will only make it worse. Just look at France.

Thu, 05/29/2014 - 11:22 | 4805729 Blano
Blano's picture

You made me laugh twice this time:

1) just 'cause you're you, and

2) bare

Thu, 05/29/2014 - 11:56 | 4805842 john39
john39's picture

he had me at zh goblins...

Thu, 05/29/2014 - 11:47 | 4805809 Puncher75
Puncher75's picture

Until the all knowing "government" can control and "invest" in the weather, I guess we're all screwed. 

Thu, 05/29/2014 - 12:22 | 4805944 Roger Shermanator
Roger Shermanator's picture

Newsfash: The government can't "invest" in anything.  This would imply that profit and loss calculations are taken into account to direct and allocate capital, instead of crony political connections, size of campaign contributions, fraternity alma maters, etc...

Thu, 05/29/2014 - 10:09 | 4805423 novictim
novictim's picture

Liquidity Trap, Homey

Thu, 05/29/2014 - 11:37 | 4805776 pelican
pelican's picture

You are silly, everything in DC and NY are super great.  The coke and hookers are a great buy.  After all, NY and DC are the US.

Thu, 05/29/2014 - 09:20 | 4805191 GetZeeGold
GetZeeGold's picture



The 29.5 hr/wk job economy is just starting to get rolling.


Is this going to be the summer of recovery?

Thu, 05/29/2014 - 10:15 | 4805451 CheapBastard
CheapBastard's picture

Obamacare tax bill + postal rate increase + internet sales tax + Snowden leak and plunging of IT companies + unemployment rate = some serious Main Street slowdown

Thu, 05/29/2014 - 10:21 | 4805474 TheRideNeverEnds
TheRideNeverEnds's picture

yes, any day now; buy the dip!

Thu, 05/29/2014 - 12:37 | 4806012 SDShack
SDShack's picture

No, it's Recovery Summer 6.0 since 2.0, 3.0, 4.0, and 5.0 all failed.

Thu, 05/29/2014 - 09:17 | 4805168 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Screw it! Let's go full libtard. TARP, GM, cash for clunkers times 10!!!

Thu, 05/29/2014 - 09:35 | 4805275 Chris Jusset
Chris Jusset's picture

Great idea!  Time for TARP II .... CASH-4-CLUNKERS II ... OBAMA STIMULUS II ....

Thu, 05/29/2014 - 10:05 | 4805408 icanhasbailout
icanhasbailout's picture

I'm never going to beat my Obamacare thesis-validation-in-24-hours mark, but 9 days ain't bad either.

Thu, 05/29/2014 - 09:20 | 4805183 Save_America1st
Save_America1st's picture

Too much HAARP?  Not enough HAARP?  I'm sure once they master the weather modification system paired with the correct amount of Trillions in fiat shit paper then everything will be perfect in the world and we'll all be saved by the master minds of central economic planning and weather control. 

Heyyyyyyyyyyyy, government agency right there, ay??? 

The Bureau of Central Economics and Weather Control.  They can merge NOAA with the IRS or some psycho bullshit.

Their Orwellian slogan will be:  Weather = Taxes


Thu, 05/29/2014 - 09:45 | 4805314 Non Passaran
Non Passaran's picture

HAARP was always such a bullshit conspiracy story.
And now they're shutting it down. That must be depressing.

Thu, 05/29/2014 - 10:25 | 4805486 Dr. Richard Head
Dr. Richard Head's picture

So wait...if it was a conspiracy theory and didn't exists, then how they hell could it be shut down when it never existed in the first place.  You argue with the logic of a five year old girl.

Thu, 05/29/2014 - 09:01 | 4805089 SMG
SMG's picture

This means they can't ever stop the QE's, which means  bye bye dollar as a reserve currency. Oh boy these next few years are gonna suck.

Thu, 05/29/2014 - 09:07 | 4805117 duo
duo's picture

The standard of living of the middle class can only be increased with true economic growth (inflation adjusted).  Our economy is about 30% smaller than it was in 2007.  A stagnant economy causes increased wealth concentration, as rentier wealth extraction grows while everything else shrinks.

Long story short, begin the countdown to a modern day Bastille.

Thu, 05/29/2014 - 09:14 | 4805150 cossack55
cossack55's picture

Cool.  Go long knitting needles.

Thu, 05/29/2014 - 09:17 | 4805165 Shizzmoney
Shizzmoney's picture

I would say, "long guillotines" but because we are so distracted in America, I now say, "long LOLcats"

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