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It Was A Reeeeeally Bad Winter: JPM Cuts Q1 GDP From -1.1% To -1.6%

Tyler Durden's picture


Remember when we reported that if it wasn't for Obamacare, the US economy would have contracted not by 1% as per the revised GDP estimate but by 2%. Guess what: according to the latest spending data, the BEA massively overestimated spending on medical care services, which it had pegged at a whopping +9.7% SAAR, while according to the latest Quarterly Services Survey, the increase was actually a decrease of 5.8% SAAR! End result: one after another bank today has sprung to revise their GDP data downward, by about half a percentage point, and here is JPM, cutting its Q1 GDP from -1.1% to -1.6%, which if realized will be the worst collapse in US economic growth since the recession.

It's ok though: the winter was really strong. And the good news: since Q1 is now the "kitchen sink" quarter in which all bad news will be dumped, it simply means that the Obamacare "boost" instead of hitting Q1 where its impact is largely lost, will simply be "pushed" to Q2 and onward. Which also means that US GDP will magically from nearly -2% in Q1 to something approaching +4% in Q2. Batteries and unicorns not included.

Here is JPM.

We believe the 1Q Quarterly Services Survey (QSS) implies that there will be a pretty significant downward revision to 1Q GDP growth. Nominal revenue for selected health care services increased 3.3% oya in the QSS, while nominal consumption of medical care services increased 6.1% oya, according to the BEA’s GDP report from May 29. The quarterly changes in the data show an even starker contrast—health care revenue dropped 5.8% saar in the 1Q QSS (using our own seasonal adjustment) while the BEA had previously reported that health care consumption increased 9.7% saar, with this increase largely based on assumptions related to the implementation of the Affordable Care Act.


As we mentioned yesterday, there is some uncertainty about how the BEA will incorporate the QSS data into its estimate of health care consumption in the GDP accounts, but it looks like there could be a significant downward revision to health care consumption in 1Q which would make the health care data more in line with most of the other components of GDP which looked weak in the first quarter. The QSS data also imply some modest upward revisions to some of the other components of services consumption, and very little change to the data on intellectual property products investment, but overall, we think that 1Q GDP growth could be revised down by around half a percentage point because of data contained in the 1Q QSS (but the downward revision could be much larger depending on the BEA's interpretation of the data). We will look to the BEA for more guidance about its treatment of the QSS data in 1Q, but for now, we are taking our tracking estimate of real GDP growth in 1Q down from -1.1% to -1.6% saar.


This is how GDP forecasts for Q1 and Q2 have looked over the past year. Oops.

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Wed, 06/11/2014 - 12:23 | 4845052 Itchy and Scratchy
Itchy and Scratchy's picture

By stawks!

Wed, 06/11/2014 - 12:42 | 4845126 RevRex
RevRex's picture

GLOBAL WARMING caused the record cold that has shut down the economy........


WHY don't Republicans tell lies about GLOBAL WARMING causing RECORD COLD IF "both parties are the same"?


It seems like the repeaters of Socialist Semite Democrat  Media Election year propaganda do not want to explain the stupid things they parrot....


Gullible fools are like that.

Wed, 06/11/2014 - 12:48 | 4845156 pods
pods's picture

Dude, the republicans are done. Get over it.  You are gonna have to find a new job.


Wed, 06/11/2014 - 13:17 | 4845288 Casserole of no...
Casserole of nonsense's picture

According to NOAA scientists, the globally averaged temperature over land and ocean surfaces for January 2014 was the highest since 2007 and the fourth highest for January since reliable record keeping began in 1880. It also marked the 38th consecutive January and 347th consecutive month (almost 29 years) with a global temperature above the 20th century average. The last below-average January global temperature was January 1976 and the last below-average global temperature for any month was February 1985.

No doubt Fox News told you all about that though...

The problem with extrapolating a slight cold spell that covered a small part of the earths surface to the whole planet is that it reinforces New Yorker's perception that they are the only people that matter.

Wed, 06/11/2014 - 13:30 | 4845344 pods
pods's picture

Surely all those data points over the last hundred years were done at the exact same place and same time using the same methodology.    

Global average temperature?  That is like quoting the average phone number in the phone book.

Lemme also guess, the margin for error dwarfs the change in temperature and you have to do a fourier transform to find the real data?



Wed, 06/11/2014 - 12:40 | 4845127 pods
pods's picture

No worries, half of 'merkans cannot even spell GDP.


Wed, 06/11/2014 - 12:57 | 4845191 Gandalf6900
Gandalf6900's picture

seems like you, sir, can not spell your name


Wed, 06/11/2014 - 13:00 | 4845209 pods
pods's picture

Motherfucker, guess I know which side of that 50% I am?


Wed, 06/11/2014 - 12:41 | 4845132 knukles
knukles's picture

Don't forget that a buncha the bad data came from the West Coast which did not have bad weather and the good data came from the bad weather areas... but oh no...

Just like all the primary returns, there's something everybody got on their last Diarrhea Cruise to Mexico that's made the Teas and Libertarians get massive votes, but it's all temporary once the moxacillin  and Prevacid work, everybody'll be back to sanity.

Just like the French Right and UKIP, all stomach aches.

Man, the media is trying to spin this shit soooo hard, and the Establishment Repubs and Dumbocraps are in such disarray.


Wed, 06/11/2014 - 13:07 | 4845244 dontgoforit
dontgoforit's picture

Operation Clean Sweep.  Life, liberty and the pursuit of happiness.

Wed, 06/11/2014 - 13:21 | 4845307 SoilMyselfRotten
SoilMyselfRotten's picture

C'mon Knuk, yer goin off script

Wed, 06/11/2014 - 12:24 | 4845056 bruinfan
bruinfan's picture

They're doing what it takes to make the Q2 estimate positive so we can avoid an "official" recession.

I like their chances.

Wed, 06/11/2014 - 12:27 | 4845071 Australian Economist
Australian Economist's picture



So if GDP is -0.1% for two quarters it's a recession, but if each quarter is -1.6% and +0.1% then there is nothing to worry about?


What is wrong with this picture?

Wed, 06/11/2014 - 12:30 | 4845081 McMolotov
McMolotov's picture

Maff be hard, so it's best to ignore it.

Wed, 06/11/2014 - 12:44 | 4845134 knukles
knukles's picture

If I has free toofs and decised to pull ones of fem out, hows many toofs does I has lef?

Must view:


Wed, 06/11/2014 - 13:16 | 4845284 remain calm
remain calm's picture

Jew toofs. whatz i won?

Wed, 06/11/2014 - 12:57 | 4845196 dontgoforit
dontgoforit's picture

Sucks like a carp.

Wed, 06/11/2014 - 12:29 | 4845078 SheepDog-One
SheepDog-One's picture

Sure, why not just revise GDP to -5%, then when they present -3% they can claim the economy is booming beyond their wildest dreams!

Wed, 06/11/2014 - 13:03 | 4845225 twh99
twh99's picture

It will take at least another 6 months before the "official" announcement of a recession is given.  Which conveniently of course is after the November elections.

Wed, 06/11/2014 - 14:22 | 4845584 SDShack
SDShack's picture

Mainstreet is currently realizing the "recession" right now, and has been since 2009. This won't be Recovery Summer 6.0 anymore then 5.0, or 4.0, or 3.0, or 2.0. The system is being set up so the wheels start to fall off Q1 2015 IMO.

Wed, 06/11/2014 - 12:25 | 4845063 Bunga Bunga
Bunga Bunga's picture

Downgrade, who cares - numbers are bad anyway, but Q over Q looks better next time. Bullish!

Wed, 06/11/2014 - 12:25 | 4845064 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

Apparently this translates to sell gold. 

Wed, 06/11/2014 - 12:30 | 4845083 Winston Churchill
Winston Churchill's picture

Everything does.

All the wheels are off the bus now, and its now beyond manipulating the figures

anymore.Enjoy the ride.

Wed, 06/11/2014 - 12:37 | 4845114 Ozy_mandias
Ozy_mandias's picture

'Somone' just dumped ~500million worth or so

Wed, 06/11/2014 - 12:25 | 4845065 oklaboy
oklaboy's picture

2....2...2...dI hear 2?  2.3...2.3...do I hear 2.3?  yes, you sir, in the GS golf shirt, I have 2.3....now can I have 2.5? ...2,5?

Wed, 06/11/2014 - 12:27 | 4845069 SheepDog-One
SheepDog-One's picture

Surely now all clear to reach euphoric economic escape velocity in 3....2....

Wed, 06/11/2014 - 12:33 | 4845096 Winston Churchill
Winston Churchill's picture

Like projectile diarhea.

Wed, 06/11/2014 - 12:31 | 4845084 Spungo
Spungo's picture

Less money spent on stuff means more money is available for investment. Bullish!

Wed, 06/11/2014 - 12:35 | 4845106 101 years and c...
101 years and counting's picture

see what happens when the Fed has the audacity to cut back on printing money?  im sure there's a 1-1 correlation here somewhere...

Wed, 06/11/2014 - 12:31 | 4845086 Global Hunter
Global Hunter's picture

They have a plan!  Break some windows and essential infastructure in Eastern Ukrainian cities and we'll be in double digits by the end of the year.

Wed, 06/11/2014 - 12:35 | 4845103 Bunga Bunga
Bunga Bunga's picture

That strategy turned out to be sooooo successful.



Wed, 06/11/2014 - 12:31 | 4845088 orangegeek
orangegeek's picture

Oct 2013 - 4.7% for 2014


by March 2014 (5 months later), annualized -1.6%


but these are just inconvenient facts


we are in a bull market - prosperity for everyone, even the 50M Americans on food stamps!!!!!!


Wed, 06/11/2014 - 13:01 | 4845212 dontgoforit
dontgoforit's picture

Give that man a moon pie and a big yeller dope!

Wed, 06/11/2014 - 12:32 | 4845089 LawsofPhysics
LawsofPhysics's picture

Ah yes, the propaganda of infinite growth in a closed system with finite resources is coming hard and fast now...

good luck with that.

Wed, 06/11/2014 - 13:04 | 4845233 pods
pods's picture

But Hannity said that if they cut taxes and drill baby drill then everything will be alright.


Wed, 06/11/2014 - 12:35 | 4845104 FlyinHigh
FlyinHigh's picture

If JPM revises something/anything DOWN, that's good for gold, Right?

Wed, 06/11/2014 - 12:37 | 4845108 Cangaroo.TNT
Cangaroo.TNT's picture

For the love of God, can we please come up with a realistic measure of "growth" other than delta GDP?

Wed, 06/11/2014 - 12:46 | 4845115 Seasmoke
Seasmoke's picture

Wow, Are we still manipulating Q1 ???.....Back to the Future !!

Wed, 06/11/2014 - 12:50 | 4845164 Glass Seagull
Glass Seagull's picture



That's just great.  You would think Q1 was a nuclear war.

Wed, 06/11/2014 - 12:51 | 4845167 Last of the Mid...
Last of the Middle Class's picture

negative interest rate, negative GDP,  and stocks are soaring, billion dollar ipo's on a iphone game. What could possibly go wrong?

Wed, 06/11/2014 - 13:00 | 4845211 Gandalf6900
Gandalf6900's picture

Amerikans stop buying useless shit....

Wed, 06/11/2014 - 13:03 | 4845219 dontgoforit
dontgoforit's picture

It's headed down now.  DJIA down 91 at the moment.  This week's gonna be a turning point.

Wed, 06/11/2014 - 12:56 | 4845192 Colonel Klink
Colonel Klink's picture

What recession, you mean ongoing D E P R E S S I O N don't you?  Take away government largess and feral Federal (hahaha) Reserve (hahaha) money printing, and we're way lower than 10% loss to GDP.

Wed, 06/11/2014 - 13:04 | 4845232 dontgoforit
dontgoforit's picture

So true!  All those lost jobs amount to negative growth big time.  If the REAL numbers were released people would marvel that anything is working.

Wed, 06/11/2014 - 13:06 | 4845240 MuleRider
MuleRider's picture

How is it the stupid, fecal-hurling maggots that FUBAR an estimate of +9.7% when it's actually -5.8% able to keep a job (or stay out of jail)? 

If I (or most people) were t miss that badly at my job, I' d be immediately fired and possibly be considered a criminial. 

Wed, 06/11/2014 - 13:10 | 4845258 Last of the Mid...
Last of the Middle Class's picture

Everything translates into "sell gold" until you go to swipe your nifty little debit card at the gas station or wally world and the attendant or cashier tells you a tank of gas is $1000 or more. Best to have a plan b in place. 

Wed, 06/11/2014 - 13:11 | 4845260 TheRideNeverEnds
TheRideNeverEnds's picture




Wed, 06/11/2014 - 13:16 | 4845270 Chuck Knoblauch
Chuck Knoblauch's picture

Can the Queen confiscate guns fast enough before the economy collapses.

It's a race to the finish line.

After the guns are gone, they can do whatever they want.

Wed, 06/11/2014 - 13:17 | 4845286 Winston Churchill
Winston Churchill's picture

Going to need a big false flag very soon.

Wed, 06/11/2014 - 13:15 | 4845281 KnuckleDragger-X
KnuckleDragger-X's picture

too hot, too cold, too wet, too dry, face it Gaia hates us. /s

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