Goldman Boosts Q2 GDP Forecast Due To Collapse In Q1 GDP

Tyler Durden's picture


"...we think that Q1 GDP was an aberration, and is not representative of the strengthening underlying trend in US growth." There is nothing we can add to such brilliant weatherman insight as what Jan Hatzius from Goldman just unleashed on the unwitting muppets (all of whom can't wait for Goldman's second above-consensus GDP forecast to pan out... unlike the last time in 2010). In brief: Goldman just boosted their Q2 tracking GDP from 3.8% to 4.0% because Q1 GDP imploded. And scene.

BOTTOM LINE: Q1 GDP was revised down even more than expected, mainly due to lower-than-expected healthcare spending. The May durable goods report was a bit weaker than expected, although inventories rose more than expected. We increased our Q2 GDP tracking estimate by two-tenths to 4.0%.


1. Q1 GDP was revised to -2.9% in the third estimate (vs. consensus -1.8%), from -1.0% previously. The downward revision was concentrated in two categories: healthcare spending subtracted 1.2 percentage points (pp) relative to the second estimate, while net exports subtracted 0.6 pp. All other components of GDP combined contributed a further one-tenth to the revision. We had anticipated downward revisions to both healthcare spending and net exports—in particular in light of the weak healthcare numbers in the Q1 Quarterly Services Survey—but the extent of these revisions was larger than we expected. As we noted in yesterday's US Daily, we think that Q1 GDP was an aberration, and is not representative of the strengthening underlying trend in US growth.


2. Headline durable goods orders fell 1.0% in May (vs. consensus flat). Within the typically volatile categories, a large decline in defense orders (-31.4%) and a modest decline in non-defense aircraft (-4.0%) pulled down the headline figure. Core capital goods orders rose 0.7% (vs. consensus +0.5%) and core capital goods shipments—used by the Commerce Department to calculate the equipment investment component of the GDP report—rose 0.4% (vs. consensus +1.0%) in May. Growth in durable manufacturing inventories grew 1.0% in May and was revised up two-tenths to 0.3% in April.


3. We increased our Q2 GDP tracking estimate by two-tenths to 4.0%.

Baghdad Bob is spinning in his grave.

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Wed, 06/25/2014 - 10:01 | 4892986 Temporalist
Temporalist's picture

Goldman: Long hookers and coke

Wed, 06/25/2014 - 10:19 | 4893111 Headbanger
Headbanger's picture

Fuck you Goldman.

Wed, 06/25/2014 - 10:30 | 4893174 tgatliff
tgatliff's picture

To me, it makes complete sense what Goldman is saying.. Q2 will no doubt be reported to be outstanding for one reason and one reason only.  There is an election in November and the PTB need it to appear like  things are getting better.   Historically,  distraction and possible hope has a waysof disengaging people politically.

Wed, 06/25/2014 - 10:50 | 4893264 NotApplicable
NotApplicable's picture

Q2 Obummercare spending, FTW!

Wed, 06/25/2014 - 10:57 | 4893301 20834A
20834A's picture

+100 That is exactly what I thought.

Wed, 06/25/2014 - 11:00 | 4893318 stoneworker
stoneworker's picture

I think you are right we are going to see double digit growth...forget Goldman's puny 4%...25%  no less....print baby print!

Wed, 06/25/2014 - 10:44 | 4893238 asteroids
asteroids's picture

I guess all those people on food stamps and the employment participation rate are "aberrations" as well. Go fuck yourself GS.

Wed, 06/25/2014 - 11:42 | 4893526 RiskyBidness
RiskyBidness's picture

I still can't stop laughing!!  Great Comment!!

Wed, 06/25/2014 - 11:42 | 4893527 RiskyBidness
RiskyBidness's picture

I still can't stop laughing!!  Great Comment!!

Wed, 06/25/2014 - 10:02 | 4892989 Racer
Racer's picture

LOLOL, 'when it gets serious you have to lie'


BTW Baghdad Bob is not a patch on Goddam Suckers!

Wed, 06/25/2014 - 10:15 | 4893080 thatthingcanfly
thatthingcanfly's picture

He's not? Well, he should be.

Wed, 06/25/2014 - 10:27 | 4893157 CrashisOptimistic
CrashisOptimistic's picture

Oh, btw,

"The bond guys usually get it right."

Wed, 06/25/2014 - 11:02 | 4893324 bagehot99
bagehot99's picture

This is classic weatherman economics: because it wasn't sunny today, as we forecast, then tomorrow it will be sunny until midnight.

We're being fucked in the ass, and it's really (I mean it, it's really) time to start cutting out the rope and selecting the trees. On the BIG THINGS it makes not a fucking nickel's worth of difference who is nominally in government. Because the government is in government at all times.

And your vote is a joke. The banks and the establishment are running the show, and you'd better be happy citizen.

Now run along and watch the circus.

Wed, 06/25/2014 - 10:03 | 4892992 ENTP
ENTP's picture

They've got to bump it up to 4%, as we have to average 4% for the rest of the year to hit the 2.2% 2014 target.  Or wait....should they just admit a week after lowering GDP from 2.8% to 2.2% for 2014, that they need to lower it some more?


The question you really have to ask yourself, if you were Goldman, would you be buying stawks or unloading stawks right now?  If you were unloading, to get maximum value you blast a headline to make the algos want to buy from you.

Wed, 06/25/2014 - 10:02 | 4892993 Winston Churchill
Winston Churchill's picture

Comedy Gold-man.

Wed, 06/25/2014 - 10:04 | 4893006 unplugged
unplugged's picture

gold member

Wed, 06/25/2014 - 10:02 | 4892998 katchum
katchum's picture

Goldman's sack are idiots.

Wed, 06/25/2014 - 10:15 | 4893075 madcows
madcows's picture

Nope.  They're fucking Rich SOB's.  Anything they print in the media is just another attempt at making more money.

Wed, 06/25/2014 - 10:03 | 4893000 unplugged
unplugged's picture

The Establishment's mantra:   "We will lie as much as we can get away with"

Wed, 06/25/2014 - 10:09 | 4893027 NoDebt
NoDebt's picture

They've gotten away with a lot the last few years.  They're getting bolder.  They're basically to the point where they're just daring anyone to call them on it.

Wed, 06/25/2014 - 10:16 | 4893089 madcows
madcows's picture

Is it a lie if they believe it?  2+2 = 5.  Say it, Winston.

Wed, 06/25/2014 - 10:18 | 4893104 BeerMe
BeerMe's picture

Yep.  Look at the latest from the IRS.  Lost emails then smashed hard drives now something about lacking space...

Wed, 06/25/2014 - 10:03 | 4893001 dirtyfiles
dirtyfiles's picture

there is no scale for idiocy

Wed, 06/25/2014 - 10:04 | 4893003 Kaiser Sousa
Kaiser Sousa's picture

did anyone just see what the Dow did..

from 15 points down to up 30 in a minute..

and the Gold and Silver cap at 1320. and 21.00 is hilarious to watch..

fucking joke.

Wed, 06/25/2014 - 10:05 | 4893010 unplugged
unplugged's picture

the market controls will continue until morale improves

Wed, 06/25/2014 - 11:22 | 4893433 crazybob369
crazybob369's picture

Meanwhile, over in the corner, oil continues its climb back from its slamdown from 107.50 to 105.50. Truly funny watching these charts. It's like watching a giant game of whack-a-mole. OMG gold is up-whack. Look, there goes silver-whack. Oh no! we forgot about oil-whack. One of these days they're going to miss, then things will get really interesting.

Wed, 06/25/2014 - 13:02 | 4893985 walküre
walküre's picture

Easy. There's low to no volume and the guys who control the data, can display anything they like on the boards.

Fascinating actually to think that we ever believed any of it was real or true? Hollywood got started a century ago and propaganda and new media has been developed ever since.

I don't know what to believe is real anymore but I do know 100% guaranteed that the few ounces I've got are solid and proven real with certs. I cannot say the same for the cash in my pocket and I wouldn't assume the stocks they're offering have any real value.

Wed, 06/25/2014 - 10:04 | 4893008 Little Boomer
Little Boomer's picture

One more quarter till the Obamacare Recession.

Wed, 06/25/2014 - 10:09 | 4893032 NoDebt
NoDebt's picture

None of us will live long enough to see the next officially declared recession.

Wed, 06/25/2014 - 11:00 | 4893314 SheepDog-One
SheepDog-One's picture

They have until a white republican guy is president at the very latest....can't declare a recession with a black guy in charge.

Wed, 06/25/2014 - 10:06 | 4893009 orangegeek
orangegeek's picture

corps are running out of cash and they don't have the luxury of a printer - so share buybacks may not last much longer


or more ZIRP bonds could be bought to finance share buybacks - revenue?  profit?  don't need 'em anymore


fuck you goldman nutsacks

Wed, 06/25/2014 - 10:07 | 4893022 unplugged
unplugged's picture

nonsense - whatever you think can't happen in the New Normal will happen in spades to save the Establishment's sorry ass

Wed, 06/25/2014 - 10:26 | 4893150 youngman
youngman's picture

The Corps are now borrowing to do the buybacks.....amazing

Wed, 06/25/2014 - 10:05 | 4893011 JustObserving
JustObserving's picture

Can we add air, rain and sun to the GDP? And doing God's work.

Wed, 06/25/2014 - 13:24 | 4894100 FredFlintstone
FredFlintstone's picture

Add global warming :)

Wed, 06/25/2014 - 10:06 | 4893014 ptoemmes
ptoemmes's picture

Ain't gonna have to wait long....only 6 more GDP days in Q2.



Wed, 06/25/2014 - 10:10 | 4893037 unplugged
unplugged's picture

which then starts the process of GDP revision announcements which lasts 6 more months....

Wed, 06/25/2014 - 10:07 | 4893019 The Axe
The Axe's picture

I truly give up.....

Wed, 06/25/2014 - 10:30 | 4893176 CrashisOptimistic
CrashisOptimistic's picture


Now find farmland.

Wed, 06/25/2014 - 10:08 | 4893028 buzzsaw99
buzzsaw99's picture

duh, zh reported this farce earlier. no-brainer statement. the headlines will keep getting moar ridiculous in an attempt to generate moar trading volume for the maggots.

Wed, 06/25/2014 - 10:15 | 4893084 Buggy
Buggy's picture

So this 3rd revision of Q1 is at the end of Q2 which means the 3rd revision of Q2 will come out end of September, just over a month before elections.  This means that the 3rd quarter revision of Q2 will show HUGE quarter over quarter growth.  And that will be all that matters since Americans will have long forgotten Q1.  After all, it will be the start of the new TV season. 

Wed, 06/25/2014 - 10:21 | 4893124 replaceme
replaceme's picture

You should put a resume into BLS  - you have the instincts to go far : )

Wed, 06/25/2014 - 10:59 | 4893311 Ban KKiller
Ban KKiller's picture

Yes, he seems to have read the playbook. 

Wed, 06/25/2014 - 11:04 | 4893341 bagehot99
bagehot99's picture

That's how it's done. It's not even sophisticated, because it doesn't need to be and the country has no 'NEWS' providers to expose this kabuki theater for what it is.

Wed, 06/25/2014 - 10:15 | 4893090 replaceme
replaceme's picture

You never go full Goldman.

Wed, 06/25/2014 - 10:23 | 4893140 Yen Cross
Yen Cross's picture


Not only did they open the doors to our borders, they also opened the doors to the ' Looney Bin'.

Wed, 06/25/2014 - 10:23 | 4893141 Zerozen
Zerozen's picture

In that quote summary Goldman re-hashes all the reasons why final Q1 GDP was so bad - ok, fine - but nowhere do they explain why they think Q1 was an aberration. I'd really like to see them explain that one.

And how does one get to the logic of increasing Q2 projections because Q1 didn't meet your expectations? No change in the underlying components or economic fundamentals, just "well it was lower here so we'll just make it higher over there".

Wed, 06/25/2014 - 10:32 | 4893183 CrashisOptimistic
CrashisOptimistic's picture


It's all going to get better because oil was higher in Q2 than Q1, dragging more on GDP.

Wed, 06/25/2014 - 10:40 | 4893226 Bioscale
Bioscale's picture

It's the weather!

Wed, 06/25/2014 - 10:38 | 4893205 Everybodys All ...
Everybodys All American's picture

Everyone in the media has been describing what we currently see as a great economy. This is so insane. Can we all agree the collapse is now certain especially given that Obama has two more years to make it happen.

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