• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

The Penguin Parade Begins: Goldman, BofA, Credit Suisse All Cut Q2 GDP Forecasts By 0.5% On Average

Tyler Durden's picture


Remember when the "thesis" for Q2 growth was that just because Q1 was so horrible, Q2 will have to bounce back? Well, oops.

Following the horrendous ADP data, the abysmal April trade numbers, and the disastrous Q1 productivity collapse (which certainly should make the Fed reassess their baseline estimate for 2.8% GDP growth), the penguin parade in which sellside "analysts" rush to show just how clueless they really are, has begun, first with Bank of America which cut its Q2 GDP forecast by 0.5% to 3.6%, then Credit Suisse lowering its Q2 forecast by 1 whopping percentage point to 3.0%, and now heeeeere's Goldman, which cuts not only its Q2 GDP forecast to 3.4% from 3.8%, but also the already abysmal Q1 GDP to worse than -1%.

Expect many more cuts before this latest farce is over.

Here's Goldman's Jan Hatzius:

BOTOM LINE: ADP employment grew less than expected in May.  The trade deficit widened considerably more than expected in April and was also revised wider for March.  Productivity was revised down a bit more than expected in Q1.  We reduced our Q1 past-quarter tracking by two-tenths to -1.1% and also reduced our Q2 tracking by four-tenths to 3.4%.


1. ADP employment increased 179k in May (vs. consensus 210k). The largest job gains were seen in professional and business service jobs (+46k) and trade, transportation, and utilities (+35k). Construction employment added 14k and manufacturing employment added 10k. April ADP employment growth was revised down 5k to 215k.  ADP has yet to prove itself as a reliable predictor of nonfarm payroll job growth, following methodological revisions in 2012.


2. The April trade deficit widened unexpectedly sharply to $47.2bn (vs. consensus -$40.8bn), from $44.2bn in March, which was also revised wider. The widening in April was mainly driven by a larger real ex-petroleum trade deficit (-$4.5bn to -$48.4bn). Exports fell 0.2%, driven by a decline in goods exports, while imports rose 1.2%.


3. Productivity was revised down to -3.2% in Q1 (vs. consensus -3.0%), from an initial estimate of -1.7%. As a result, unit labor costs were revised up to +5.7% (vs. consensus +5.3%). The increase in unit labor costs reflected both the weak productivity numbers and a 2.3% increase in hourly compensation.  Smoothing through some of the quarter-to-quarter volatility, unit labor costs rose 1.2% over the last year.


4. As a result of the wider trade deficits reported for March and April, we reduced our Q1 past-quarter tracking by two-tenths to -1.1% and our Q2 tracking by four-tenths to 3.4%.

But wait, there's good news: because any collapse in Q2 GDP will simply mean that Q3 will have to be boosted that much higher. Just like Q1. Just like Q4, and so on. Because when the rigged, propaganda music is playing one has to dance.

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Wed, 06/04/2014 - 09:41 | 4822878 PlusTic
PlusTic's picture

the parade of clowns...these guys couldn't pick their nose

Wed, 06/04/2014 - 09:44 | 4822897 101 years and c...
101 years and counting's picture

thats because their hands are always in your pockets.

Wed, 06/04/2014 - 10:07 | 4823025 Steve in Greensboro
Steve in Greensboro's picture

The barackalypse continues.

Wed, 06/04/2014 - 09:46 | 4822904 B2u
B2u's picture

because they have their fingers up each others asses....

Wed, 06/04/2014 - 10:33 | 4823114 JRobby
JRobby's picture

Moronic fucks. They will do anything for money. Obviously selling the ground out from beneath unborn feet is the skill central to "moving up" within these firms.


Wed, 06/04/2014 - 11:51 | 4823395 PT
PT's picture

Ummm, is this like a game of Reporting Chicken?  You know, the first one to adjust their report loses, and then everyone else breathes a sigh of relief because now they can adjust their numbers too.

Wed, 06/04/2014 - 09:42 | 4822884 spekulatn
spekulatn's picture

The penguin parade begins:



Well done ZH.

Wed, 06/04/2014 - 09:51 | 4822937 NoDebt
NoDebt's picture

And just about the time everyone agrees there won't be a bounce-back in Q2, the number will print at +6.2%.  (Because these numbers are meaningless and float in mid-air).

Then it'll be time for the Tylers to break out the picture of the deer.

Wed, 06/04/2014 - 20:58 | 4825278 philipat
philipat's picture

Is that "Seasonally adjusted"??

Wed, 06/04/2014 - 09:43 | 4822890 venturen
venturen's picture

keep giving billions to the richest and see how it works out! FEDS & Politics are IDIOTS!

Wed, 06/04/2014 - 09:51 | 4822936 Rip van Wrinkle
Rip van Wrinkle's picture

FEDS & Politics










They know exactly what the score is.



Wed, 06/04/2014 - 10:11 | 4823038 American Dreams
American Dreams's picture

Spot on brother Rip.  Just like when we see some of the anti fed crew (Schiff, Martensen, etc..) proclaming that the fed has no idea what it is doing.  To the contrary they know exactally what they are doing and they are doing it adeptly. 

Know your enemy


Wed, 06/04/2014 - 09:43 | 4822891 B2u
B2u's picture

"ADP has yet to prove itself as a reliable predictor of nonfarm payroll job growth, following methodological revisions in 2012."


If ADP data is not reliable then why change the GDP forecast?

Wed, 06/04/2014 - 09:47 | 4822892 Dr. Engali
Dr. Engali's picture

Lol..... NOBODY could have seen this coming..... idiots. They will eventually revise it down far enough to get us a 'surprise' to the upside when the actual  manipulated data point come out. 

Wed, 06/04/2014 - 13:33 | 4823750 SDShack
SDShack's picture

They can only play the manipulated GDP game for one more Qtr. The wheels start to come off in Q3, and it will be apparant to everyone in Q4. The beast is 0zer0care, and it will begin to consume everything in Q3. That's when the insurers send out their policy changes to EMPLOYERS, so the employers can do their annual business plans for 2015. Businesses are going to absolutely go into shut down mode in Q3 when they realize the cost increases coming at them for 0zer0care, and that will translate into dropped EMPLOYER coverage, unemployment, or sticker shock for EMPLOYEES in Q4 lucky enough to still have Employer HC when they get their annual HC Open Enrollment notifications. The November Election and Holiday Season are going to be abysmal because of 0zer0care, and that will cause GDP to collapse going into early 2015. There will be no way to hide the upcoming disaster that is going to unfold. The train carrying munitions is on the tracks, running full throttle approaching a left hand turn entering a major city, and there is nothing the conductor 0zer0 can do to slow it down. The trainwreck is going to devastate millions.

Wed, 06/04/2014 - 09:44 | 4822896 HUGE_Gamma
HUGE_Gamma's picture

SP down 0.2%.. its a bloodfest out there

Wed, 06/04/2014 - 09:45 | 4822900 oklaboy
oklaboy's picture

they are forgetting the minus sign....

Wed, 06/04/2014 - 12:54 | 4823626 Bunga Bunga
Bunga Bunga's picture

Don't worry, ISM will fix that.

Wed, 06/04/2014 - 09:46 | 4822908 Yen Cross
Yen Cross's picture


Would someone just kick the fucking legs out from under this "market stool" already.

    Let's have a thread for Q-2 gdp miss excuses Tyler... I'm in the mood for some good laughs.

Wed, 06/04/2014 - 09:52 | 4822947 NoDebt
NoDebt's picture

That's the spirit!

Wed, 06/04/2014 - 09:47 | 4822913 intric8
intric8's picture

Down is the new good!

Wed, 06/04/2014 - 09:47 | 4822920 youngman
youngman's picture

We are back to three years ago when everyone was screaming green shoots....the summer of growth....all propaganda...

Wed, 06/04/2014 - 09:54 | 4822960 Chuck Knoblauch
Chuck Knoblauch's picture

2008 marked the year America became a Fascist State.

Too big to fail or jail changed everything.

No one is to be trusted, even if they're being paid by you.

You serve the banks.

Wed, 06/04/2014 - 09:48 | 4822924 TideFighter
TideFighter's picture

This ain't news. Coverage is about how a Calvinist home-schooled boy who wasn't accepted by the Peace Corps, joined the military, walked off post, caused multiple soldiers' deaths when trying to recover him, was traded as an EXCUSE by Scumbama, who was going to close Gitmo and send the Taliban home anyway. 

Wed, 06/04/2014 - 09:51 | 4822935 Chuck Knoblauch
Chuck Knoblauch's picture

The CIA is always looking for a good Calvinist to recruit.

Wed, 06/04/2014 - 09:49 | 4822928 Chuck Knoblauch
Chuck Knoblauch's picture

The believers left the building in 2008.

The bankers are talking to ghosts.

No one is listening to them anymore.

They are preaching to themselves.

They have gone insane.

Wed, 06/04/2014 - 09:49 | 4822929 TheFreeLance
TheFreeLance's picture

As long as you operate under the assumption that you can ALWAYS "pull" future demand to the present, of course lack of CURRENT demand can only mean more demand in the future. The central planners think there is a bucket-brigade of "demand" out there, that the last bucket will always get filled.

They never think to ask: What if the well has gone dry?

Wed, 06/04/2014 - 09:49 | 4822930 ptoemmes
ptoemmes's picture

.5% average downward revision on Q2 GDP first call.  Relax...though they will have to pick up the dowward revision pace the next two months a bit to get it under zero.  I have faith that they can do it rogue computer algortihms nothwithstanding.

Wed, 06/04/2014 - 09:57 | 4822974 JustObserving
JustObserving's picture

Did they get Yellen's permission before they cut their forecasts?

Wed, 06/04/2014 - 10:01 | 4822990 Jack of All Trades
Jack of All Trades's picture

Recovery Summer Part VI coming to a theater near you.


Watch the Choomander in Chief and Clueless Joe work their propoganda magic to keep the gullible masses content.  Janet Yellen is a great supporting actor er actress.  This also marks the debut of the mystery "Belgian" buyer (played by Ben Bernanke).  As with all previous "Recovery Summer" films, the markets continue to rise through chicanery and printing, even as the economy deteriorates.  A tried and true formula.  Filming for Recovery Summer Part VII (Escape from El Nino) has already begun .  . .

Wed, 06/04/2014 - 10:04 | 4823014 Eyeroller
Eyeroller's picture

Nasdaq just went green!

Wed, 06/04/2014 - 10:05 | 4823017 Rodders75
Rodders75's picture


Wed, 06/04/2014 - 10:07 | 4823023 BeerMe
BeerMe's picture

Reminds me of baseball where a player is in an 0 for whatever slump and the announcer continues to say "he is due for a hit."  Then you see him strike out looking, pop out, strike out swinging and ground out for the next four games.

Wed, 06/04/2014 - 10:07 | 4823029 ReactionToClose...
ReactionToClosedMinds's picture

I spent much of yesterday afternoon reading one Seeking Alpha article/analysi/comment after another about how positive USA economic growth will be in contrast to the always gloom & doomers (like ZH?) .....

Recent economic reports are a refreshing dash of cold water in the faces of the ever-optimistic.  And they lecture you Barry R Big Picture style not to apply 'political' views to investment decisions........sheesh...as if one is supposed to ignore the economic reality all around one that is dismal despite the incredible liquidity.   There can be no 'trickle' down' effect when there is no velocity or economic growth ..... FORWARD!!!

Query: what does near propagandist Mark Zandi have to say?   worst winter in history shrunk GDP I bet ........

Wed, 06/04/2014 - 10:18 | 4823057 Everybodys All ...
Everybodys All American's picture

These analysts have become the propaganda machinery that keeps the Obama fascists in power. The once inconceivable has become normal.

Wed, 06/04/2014 - 10:42 | 4823140 Puncher75
Puncher75's picture

Ever notice Million Dollar Bonus never comments when this type of data is released?

Wed, 06/04/2014 - 10:55 | 4823180 bagehot99
bagehot99's picture

He's clearly otherwise occupied, making piles of cash trading da marketz.

Or sitting crying in his mom's basement.

You decide.

Wed, 06/04/2014 - 10:53 | 4823171 Al Huxley
Al Huxley's picture

...blah blah blah...weather... improving outlook...blah blah blah.... so in conclusion, buy stocks.

Wed, 06/04/2014 - 11:03 | 4823215 orangegeek
orangegeek's picture

lather, rinse, repeat, do-over

Wed, 06/04/2014 - 13:56 | 4823854 Hal n back
Hal n back's picture

So how many years now had consensus GDP failed>


LAst March, the ST Louis Fed President (Bullard?)  forgot his name, was on CNBC saying by the end of 2013 we would be at 3% GDP he forecast.

Its beyond their pay grade


2 years ago we had an election-both candidates proclaimed they had the key to better jobs--economic growth


most of us have to work and deliver. Now I know why elected officieals need to be in government. They do not have accountability nor do they have to deliver, just talk.





Wed, 06/04/2014 - 18:27 | 4824844 AynRandFan
AynRandFan's picture

The bullshit on both sides of everything is so deep, there is no "truth" anymore.  Is the economy growing?  Sure, ok, there's a lot of money around for stuff that doesn't seem to count in the long run.  

Example, money is pouring into Colorado for everything related to marijuana.  Warehouse space is suddenly too expensive for ordinary shippers and distributors, because that's where you grow it.  Despite the wonderful quality of having a huge markup business, what does pot contribute to the productivity of this society? Nada, or less.

Stock prices are up and up on the back of corporate buybacks and a kind of blind, utopian complacency.  "We will never run out of money," said Charlie Rangel.  We can strangle economic energy like coal and the public expects no consequences because they bought the moral argument hook, line and sinker.  We can raise the minimum wage to $15 because, gosh darn it, those people deserve a living wage and nobody expects prices to reflect the cost of labor.  Kids today can't read or write longhand, but they sure know what is "right" and it doesn't have anything whatsoever to do with cost, debt, profit or pragmatism.

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