JPM Cuts Its Original 2014 GDP Forecast In Half, Sees Slowest Full Year Growth Since 2009

Tyler Durden's picture

It was precisely 6 months ago, on January 3, when JPM, blissfully unaware of the powerful snowstorms that were raging outside its office, a condition which would later be branded with the technical economic term "harsh weather", predicted that the US economy would grow by 2.5% in the first half and 3.0% in the second, leading to a solid 2.8% annualized growth for 2014, a growth rate which would mean the US economy would grow at the fastest pace since 2005.

Fast forward exactly six months later, when on July 3, "harsh weather" firmly in the rear view mirror (but blissfully unaware of the record drought slamming California, the monsoons about to crush India, and El Nino set to ravage the US in the fall, not to mention two regional civil wars, a China whose housing bubble has popped and whose rehypothecation scandal means Chinese GDP is about to fall off a cliff, and global trade generally grinding to a halt), JPM has just followed with a revised GDP forecast. Its latest (and certainly not least) prophecy for the full year GDP: precisely one half of what it expected 6 months ago, or just 1.4%, following a cut to Q2 GDP to 2.5% from 3.0% (which means negative growth for the entire first half, something in a less insane world would be called a recession), while keeping Q3 and Q4 GDP miraculously at 3.0% for both quarters.

From JPM:

GDP growth and job growth go their separate ways: The contrast between weak GDP growth and strong job growth in 1H14 only intensified this week. Real GDP growth in 1Q14 was -2.9% saar, and we are reducing our forecast for 2Q14 to 2.5% (from 3.0%). Real GDP appears to have contracted in the first half. At the same time, payroll employment averaged 231,000 in 1H14, the strongest six-month run of job growth in the expansion to date. The obvious result is a sharp decline in productivity in 1H14 and a surge in 1H14 unit labor cost estimated at about 5% saar.

In other words, instead of above-trend, "escape velocity" GDP, the highest in nearly a decade, in 2014 US GDP is now poised to grow just 1.4% - the lowest annual growth rate since the Lehman crash.

What a difference a snow storm makes!


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AllWorkedUp's picture

Should be good for another 1000 DOW points.

nink's picture

Why are the markets closed? This bad good news would have taken it to the moon.

max2205's picture

Joan Rivers a truther?


All the good news comes out after the market closes

Oracle 911's picture

That snowstorm at 31st June was the worst ever.

remain calm's picture

Its really hard to understand JPM these day given all the HPV they contact on a daily basis. I guess a rising market is worth all that throat cancer.

Manthong's picture

But isn't JPM's biggest problem whatever oral disease stems from E. coli?

remain calm's picture

Trust me, I take care of a lot of patients with throat cancer. This is a sexually transmitted disease, and you get it from sucking dick or eating bad pussy. I would guess in JPM case it's a lot of dick sucking. Its all preventable too, JPM could have gotten all their employees vacinated when they hired them. Damn shame. ?

Leonardo Fibonacci2's picture

I'm richer than you but i have throat cancer b/c: too much DATY and embargo Cuban Cohiba cigars!!!

smlbizman's picture

jim willie said he has a source that has worked at jpm for 20 years and said dimon does not have cancer and he is just using that as a way to get out....

skbull44's picture

Lies, damned lies, and statistics....

Peter Pan's picture

One day the headline "JPM Cuts Its Original 2014 GDP Forecast in Half" is going to mean exactly that.......GDP will be half of what it was the previous year. The economy will shrink by 50%.

The fools at JP Morgan think that a surge in part time work and a fall in full time jobs can sustain households and the future. Or is this the new norm that we all eventually return to a subsistence level of existence?

Wait What's picture

3 recessions (assuming Q2 GDP comes in as I forecast) in the span of 12 years means there's something wrong with the American economy. maybe it's been sucking on HPV laden genitalia like Dimon.

it's really kind of amazing, but I was just looking at it: in my lifetime the US economy has suffered through 4 recessions, at least half a dozen asset bubbles, 2 huge and pointless military invasions, and 2 of the top 3 worst presidents in modern history... not to mention what the global economy has endured: about a dozen financial crises spaning every part of the globe from asia to europe to the americas.

my peers and I really got the short end of the stick when it comes to historically auspicious environments into which we could have been born.

NoDebt's picture

The second half will be fine.  And by 'fine' I mean explainable in its miss.  We've now got a hurricane coming up the east coast, ruining one of the biggest weekends of the summer.  The storyline is already locked in.

Greenskeeper_Carl's picture

That's very true. And it's hurricane season, so another storm or two can be blamed for the quarter after that. Then after that I'm sure there will be snow. And it's totally believable too: this is the first winter we had a lot of snow and cold weather, and these hurricane things I keep hearing about are something the US economy has never had to deal with before.

overmedicatedundersexed's picture

jpm, no chemo for you. next!!

Sudden Debt's picture

chemo? why not go for the 2 hour gamma radiation cure? It did wonders for the hulk and Jimmy loves green!

Peter Pan's picture

Perhaps Dimon should open an office in Fukushima. That way he can get radiotherapy without leaving work.

Sudden Debt's picture

All I can say is that people are optimists if you look to the dow... or plain retarted...


mendigo's picture

Stocks are not retarded. They are simply a scam.

If you were paying attention while sitting in economics class you would have heard that the price of someting is not a function of what it cost nor what it is worth - as in value.

The price of stocks is last price paid which is ever fewer people paying ever higher prices.

Price of stocks is driven by availability of funds. Has little to do with macro.

Expecting the price of stocks to make sense is retarded.

FB would be near zero if it werent for the FED.

Free cash punishes hard work.

disabledvet's picture

Those who jumped aboard this gravy train have only begun to get rewarded. M&A, restructuring, "wringing out efficiencies", economies of scale. Wall Street is only getting started here.

The incentive as always is to ditch the overhead...start building new.

"Long the wrecking ball."

youngman's picture

there are statistics to the left..and statistics to the right....and the two shall never meet..its very confusing out there now...but that happens when you manipulate the market like we have now....the new player...the Central Bankers have changed the game...bigtime

Eyeroller's picture

Banksters have change the rules.

They can't change reality, only delay it.

surf0766's picture

29 trillion and all we get it 1.4%. We need a carbon tax and run registration to fix this.

Took Red Pill's picture

Yes, but now it's hurricane Arthur that's causing the poor economic conditions.

orangegeek's picture

when the economy contracts / sales go down and earnings tank (only to be turned back up by firing the masses and share buy backs), this is bullish and will drive markets up


but this is not a bubble


do I have this right yellen???  you filthy reprobate


ps:  hey dimon - it's good to know you'll be dead soon

B2u's picture three months JPM will cut its  forecast again.

orangegeek's picture

when Q2 gdp reports at the end of July and it shows negative, my suggestion is that JPM's cut forecast will happen sooner


but I like they way you roll

SpanishGoop's picture

I would think they stop.

Even the turtle predicting soccer matches does a better job.


failure to perform's picture

Watch this and comment. It's from Montagraph and I think he's nailed what's coming.

Non Passaran's picture

I'm so depressed, I can't buy stawks right NOW to start benefiting from the future growth.
I mean if everyone is doing so great in recession imagine how markets will be doing in H2!
Green shoots bitchez!

SpanishGoop's picture

Come on America you can do it, it is only 3%.

You should see what we have to do here in Europe.


Greenskeeper_Carl's picture

Don't worry, we will be joining you guys soon, no doubt. It's only a matter of time before we start counting hookers and blow in our GDP calculations as well. And when we do, I'm sure it will be good for another 1000 points on the Dow. Interesting times we live in

Greenskeeper_Carl's picture

Don't worry, we will be joining you guys soon, no doubt. It's only a matter of time before we start counting hookers and blow in our GDP calculations as well. And when we do, I'm sure it will be good for another 1000 points on the Dow. Interesting times we live in

Smegley Wanxalot's picture

In the modern world, 2 quarters of negative economic growth is called a "healthy economic correction."  JPM knows this, and after your reeducation you will too.


BTW, let's do some rough math and assume Q2 is at 0%, then in H1 the US was at -1.4%, so to get to 1.4% for the year, the H2 average will need to be 4.2% positive growth.  They have to be fucking kidding.

disabledvet's picture

Not if you're the Government. "You don't just recreate a tax base."

Gotta incentivize. That means gold money...not inflation.

dobermangang's picture

It's the 4th of July.  You know what that means.  Back to School sales are already starting.  Stores are desperate.  When I was a kid, the Back to School sales always started the last week in August.   Anyway, I  always stock up on office supplies during the next few weeks.  Staples and Office Depot always have ridiculous, loss-leader sales during this time that will save you lots of money.  

Smegley Wanxalot's picture

Back to school?  Hell, you think they are gonna tear down the Christmas Is Only 178 Days Away signs for that?

buzzsaw99's picture

the greater depression with record high stock prices is all we have

disabledvet's picture

Yep. "Monumentally high stock prices" actually. With increasing dividends. And asset prices by and large collapsing in value.

Labor is an asset btw.

ptoemmes's picture

Come on JPM...USA just had first hurricane landfall since 2012 - the harsh weather meme could still be in play.

Who da thunk that as job growth soars on the back of a transition from full-time to part-time employment that there would be less cash/credit to spend.


lawton2's picture

If the initial Q2 GDP comes in 2% or less I think it will be close to ending up negative with the revisions. You know they don't want to say the recession word despite us being in an ongoing depression - most of us anyway.

world_debt_slave's picture

I wonder how Jamie's doing, not.

maneco's picture

I'm looking for a minus sign in front of 1.4%.

tc06rtw's picture

Has it occurred to anyone that productivity  GOES DOWN  when the employees you hire aren't competent ??