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The Scariest Spreadsheet In Fed Possession Revealed
Yesterday we reported that over the past few weeks, something very disturbing has taken place at the Atlanta Fed Center for Quantitative Economic Research, which keeps a model, called GDPNow, that mimics the methods used by the BEA to estimate real GDP growth.
According to the AtlantaFed, "the GDPNow forecast is constructed by aggregating statistical model forecasts of 13 subcomponents that comprise GDP. Other private forecasters use similar approaches to “nowcast” GDP growth. However, these forecasts are not updated more than once a month or quarter, are not publicly available, or do not have forecasts of the subcomponents of GDP that add “color” to the top-line number. The Atlanta Fed GDPNow model fills these three voids."
In other words, what the AtlantaFed has done is recreate the bean-counting methodology used by the BEA, and all other forecastsers, however instead of using monthly data update cadence, it does so with data in real time.
This is a problem because as we showed yesterday, this most real-time model of GDP estimation, is showing something scary: a 1.2% GDP in Q1 compared to consensus estimates in the mid-2% range, and a tumble of more than 1% to just what this same model predicted Q1 GDP would be one month ago!
What's going on here, and how is it possible that there is such a massive disconnect between the one, arguably most accurate and updated Fed forecasting model and everyone else.
Courtesy of an excel spreadsheet called, logically enough, GDPTrackingModelDataAndForecasts.xlsx (link), we can find the answer.
While we urge readers to play around with the model at their leisure, here is the bottom line: a snapshot of the weekly evolution of the summary tab, which shows precisely which line item is leading to the collapse in Q1 GDP, from 2.3% as of February 13 to half that as of March 2.
For those who are used seeing it on a cumulative basis, here is the other summary table that also lays out how the AtlantaFed reaches its shocking 1.2% GDP number:
What becomes immediately apparent is that while there has been a sharp deterioration across most sources of economic output including government spending, which is now expected to detract -0.8% from growth, Net Exports, and residential investment, it is the collapse in "Structures", aka non-residential investment, best known as the Capital expenditures spending or lack thereof by US shale companies on such items as offices and extraction structures, including oil and gas wells this is about to pummel US economic growth.
Incidentally, we previewed all of this in "The Next Victim Of Crashing Oil Prices: Housing" and "Houston, You Have A Huge Problem: One-Sixth Of US Office Space Under Construction Is In This Texas City."
Digging down into the underlying data, which feeds through the weekly updates of Atlanta Fed staffer Patrick Higgins (the cell comments are his), we have confirmation of what is about to "shock" everyone when the BEA reports its advance GDP report in two months time: it is all non-res structures, and especially petroleum and natural gas wells, which will (or rather already have) unleashed a full-blown investment shock for the US economy.
Of course, none of this should come as news: after all, just this past October, another Fed, this time the St. Loius Fed, had a must-read post on the correlation between oil pricess and business fixed investment in structures.
Most economists believe lower oil prices are positive for the economy: They lead to lower gasoline and diesel prices, which tend to reduce headline inflation, which increases consumer purchasing power. Lower oil prices also tend to reduce operating expenses for transportation firms, such as airlines, trucking, and delivery services. The sharp drop in crude oil prices since mid-June 2014 is generally expected to produce positive (if temporary) economic effects. Lower oil prices generally don’t benefit energy producers, but the vast majority of households, firms, and organizations are net consumers, not net producers; so, lower prices still tend to bring net benefits.
One way the effects of lower oil prices reveal themselves is through mining activity. (More precisely, “real private nonresidential fixed investment in mining exploration, shafts, and wells.”) In 2013, fixed private investment in mining activity was about 5 percent of total fixed private investment and only 0.8 percent of real GDP. Still, since the third quarter of 2009, mining activity has increased at a 17.1 percent annual rate—much faster than the 5.5 percent rate of gain in total fixed private investment.
As the graph [below], mining activity (which includes drilling) is positively correlated with crude oil prices. When oil prices rise, this activity increases and so does investment in it. When oil prices fall, this activity slows and investment in it falls.
How this graph was created: Search for mining investment to find the first series, then add “Crude oil prices WTI” for the second. Limit the sample to start in 1999.
We took the liberty of recreating the St Louis Fed blog graph which can be found here. It is shown below.
So it looks like indeed the Atlanta Fed's GDPNow model is not only accurate but is predicting precisely what will happen in the coming months.
But wait, there's more.
As was widely reported earlier this morning, oil giant Exxon became the latest major to slash CapEx as a result of plunging oil prices, and it now plans to commit some 12% less to its E&P capital spending budget in 2015, a grand total of $34 billion, compared to the $38.5 billion spent last year. Add up across all the other majors, shale and other E&P companies and suddenly you have a spending collapse in the hundreds of billions.
What this means for GDP is that 1.2% growth in Q1 may just be the beginning as capital spending collapses across the board, especially since the Atlanta Fed model description says "as more monthly source data becomes available, the GDPNow forecast for a particular quarter evolves and generally becomes more accurate."
In the meantime, for everyone else confused by such concepts as spending on non-residential structures, and capex in general, or how various components of the GDP calculation actually add up across to the bottom line number, we urge everyone to open Atlanta Fed' spreadsheet GDPTrackingModelDataAndForecasts.xlsx which may well be the "scariest" spreadsheet in the Fed's possession right now, but it is also the most informative and not burdened by non-GAAP, seasonal and various other propaganda adjustments, in order to understand why consensus is once again off by orders of magnitude from what the final Q1 GDP number will end up being, and why, no, it won't be the "weather's fault" this time.
Source: AtlantaFed and GDPTrackingModelDataAndForecasts.xls
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HAHA!
bullish US stocks
Obama: " You get what you VORTEX for I guess. "
I think it should be clear by now that the solution is to send more weaponry to the islamic militants.
And the Ukraine. "Save Ukrania."
MarketAnarchist, yes, that is one of the harsh realities of being self-appointed world police. Any where there is an unbalanced struggle, between two violently opposed groups, the American (and British) defense industries have to take it upon themselves to make sure both sides are weaponized to the Goldilocks standard (you don't want the war to be too hot OR too cold, it seems).
Investment in "structures" looks bad everywhere but Northern Virginia.
soooo.....huh!? what's up doc ? is it serious ? when i was young i smoked, will i die ?
this really doesn't tell us anything we didn't already know. Using 80s era inflation statistics, we are running 4-6% a year(at least), which means we have had NEGATIVE GDP growth for at least 5 or 6 years now, which means this wasn't a recession at all, but a depression. And we are STILL in said depression. 1.2% growth with their phony sub-2% inflation calcualtion means we really shrank 3-4 %
It has clearly been a depression, now going on 6 1/2 years. The pain has not been reported by MSM. Any that was amounted to "see these poor losers". But the pain is real and widespread.
The only difference between now and the 1930's is: TARP/FED manipulation, FDIC, UI expansion, SSA, Various Welfare Programs of all types from many sources.
What really hides the depression is simply the digital era. All the EBT cards and direct to bank subsidies replaced the food lines. The food lines are now easily hidden.
agreed. you want to see what soup lines look like nowadays, just head on up to your local walmart
kudos, tyler, plenty of homework done here
few others look under the bonnet so thoroughly these days
goes much further, go to wallstreet, and work your way to main street. along the way look at the infrastructure of the crumble. don't get caught in a bad part of baltimore or chi...
EBT cards actually financing small business:
Friend of mine was at a walmart picking up a few items and in line in front of him were 2 or 3 carts of iced sheet cakes and a lot of cake decorating icings. These were being paid for with EBT cards and food stamps. "The Baker" had many clients awaiting a "fresh baked, custom decorated cake". His pain began when there was an argument over pricing that disintegrated into mayhem. The line was not going to move, manager called etc..............
I believe I covered EBT cards etc above but left out section 8 housing.
Not for me. I can go into a grocery store and tell immediately who is on welfare. They're the ones with a cart, sometimes two, piled high with all the high margin products. Products like T-bone steaks. Things I only buy occasionally on sale. They usually are more than twice as big as a normal human. The depression will not start, IMO, until these useless whales are out on the street begging.
First off, food stamps are pretty restricted as to what they can buy. My neighbor's son works at Wal-Mart and they can't buy all of those products that you mentioned.
Second, only $80 billion a year is spent on food stamps, while our bankster buddies have received over $17 trillion since 2008 (that we know of).
Thirdly, I believe ALL welfare should end, but that ain't happening any time soon.
Shhhhh...Don't spoil his lie.
I agree. All welfare needs to be teminated...including Corporate Welfare.
But LYING about it just is an attempt to discredit the ones whom advocte the termination of welfare and warfare.
You responded to a RINO.
What do you mean?
Everything is awesome! A...W...E...S...O...M...E...awesome.
What is the matter with you?
You all just must be lazy and good for nothing.
Hugs...Goldman Sachs.
Who needs domestic CAPEX? China creates all the tooling now, for any expansion in so many sectors of US consumption. Lots of little tools sums to big wad of capex. US CAPEX is not keeping with consumption gains as it would otherwise.
Greens-- yeah but the point is it's the un-stated not admitted minus 3-4% in GDP along with the now obvious -2% which is a -6% --and thats worrysome to TPTB cause that wasn't the plan IMHO--
Of course that backs into the inflation figures which (if you look at Financial assets) equates to >8% inflation making QE4E problematic. The wages increase is another headwind along with AHC and you have a recipe for Keystone Cops--
Save from whom?
Yup, bad news is good news!! Anything to delay an interest rate hike. And anything that would fire up the QE machine again would get stawks really rockin!!
We've Pummeled Some Folks
No Doubt they’ll launch a tarp or QE or cash for... structures in that strture section to boost it backup in the stockmarket.
So better start figureing out which onces you need to buy.
They’ll print untill a cup of coffee costs 16 trillion so better join the ride as long as the dollar still has value.
I see a lot of people having fun with the collapse but they should remember that a closset with food and a box of silver of 2 or 3 thousand ounces won’t cut it to bridge a 15 to 25 year of recovery period.
If you aren’t planning to get out of the west when it collapses, you’ll join the ranks of poor bastards pretty fast.
And for that you need funds right now.
It could be if it's NIRP and QE instaed of tightening and no QE
Of course, everything's bullish these days
How many times must we tell you?!
Don't mess with Texas.
Saudi Arabia and those on board with her are going to keep pumping at warp drive until they've killed large scale shale & tar sand operations (ironically, this will produce a negative reinforcement feedback loop where existing operations that are up, running & producing try to pump as fast as they can, since the faster they pump & bail, the less $ they will lose).
From a US-CENTRIC Foreign Policy perspective, the resulting lower oil prices leverage Russia & Iran.
No cake & eating it, too, especially when Israel, the spoiled rotten child of the US (funded by US taxpayers), is involved.
Lets go from 80% storage capacity to eleventy! I haven't designed a tank farm in a few years, lets get this shit rolling!
"until they've killed large scale shale & tar sand operations"
And those that financed the operations
"and those that financed..." indeed, this is where to look for the seeds of collapse; the credit market.
btw: avatar is a kick; best mug shot ever
Want to buy an investment product, that invests in Shale gas operations? Total safe CDO? You'll get it for a discount price.
TIS, keep in mind, re-fracs typically cost 20-25% of a new well. There are thousand's of wells that are candidates. Cherry picking wells that are heavy liquid are already in play to have prog's completed, then put on schedules to have done.
Also, major fields have been heavily installing gas lift and production compressors for over a year now. The old Petro Hawk field that was acquired by BHP in South Texas is one that is nearly complete in their Hawkfeild area. Mainly gas lift compressors. This is a much less expensive way to re-pressure the resvouir, thus producing much less expensive oil with a fraction of the cost of new well development. The Utica is on deck for compressors soon is the word on the street. Gas lifts, if brought on and operated correctly, can massively increase production with little cost to the production company once installed.
I do agree it is going to be a slug fest though. The above does not help new development much.
Shitstorm Warning!
"Spreadheet"????? Turn on your spellchecker Tyler!!!
Ain't nobody got time for that!
He meant Spreadheat
But it really means Spreadshit.
For almost 2 fucking years I have been short squeezed tighter than a nun's ass (been short the market for almost 2 years, and leveraged too)... So I vowed that not unless I absolutely belive that the bubble has burst I shall not join/comment on ZH. That the day I comment will be the day that the bubble bursts. Here I am boys! Gambit is here! Now hit me as hard as you can ;)
Thank you for all the laughs and entertainment. The dice have been cast, we are speculators at this moment, sit back and enjoy the ride.
stop reading phoenix capital writings.
Lolll they are useless, to say the least.
No use hitting you - you're doing a better job of hurting yourself than any ZHer could do.
What is a" spreadheet"
How long before access to these figures disappears off the Web?
Where is the 'seasonal adjustment' column?
Gravity, in more ways than one, has finally intervened.
The whole Syria proxy war is dirty. She had proof and they killed her.
New Anonymous op as White House still ignores murder of American reporter Serena Shim in Turkey
and b/c everything about Israel is a war crime...
UN Chief: Israel may have purposely targeted UN base in Lebanon, killing Spanish soldier – VIDEO
BTW, Serena Shim is (was) hot!
WHAT THE FUCK DO YOU EXPECT WITH ZERO INTEREST FOR 7 YEARS! The FED is a disaster....and their masters are now seeing the vortex they have created.
Oh, the drama.
Who could have seen it coming?
OmG OMG! run ..run I tell you.. for the hills- the hills!! Grab a pistolo, kill everything/one.. run we are fvked. OMG help me I am sinking in the creek mud. Shoot shoot.. reload -fvk- help.. get a life preserver throw it THROW IT! FVK FVK help!
We QEed some folks..
How you like the change now assholes?
Rope and chains.
Forget your Kool-Aid and Blue Pill this morning?
Structures, Pig pens, Out Houses and Chicken Coops, don't be afraid folks, structures are popping up everywhere.
I've invested in my structures, garden, ammo, beans.....
You can add rabbit hutches to your list
I grew up with out-houses, pigs (ran wild), chickens and hunting, collecting firewood, fishing. And, it was the best time of my life, would welcome going back to that ! ! ! !
Is one of those PODS things considered a structure? Seems like a good fallback position for those waiting on tax refunds to show up in time to make the rent. It is not going to.
The neighbors have started clearing trees and are fencing in about 25 acres. I'm guessing cattle. The food price top can't be far behind. John Q. Public is always the last to know.
http://www.bbc.co.uk/news/business-31711854
"Average income back to pre-crisis levels, says IFS"The headline is all rosy, but when you actually look at the article the BBC propanda machine for headline readers has far less happy news for the 22- 59 year olds
Its all average (lets remember this is just back to 07/08 levels) except for 80% of the population, other than that its all average. That's Okay over here in the US jobs are plentiful, of course they pay $9 an hour and you can work a whole 30 hours a week.
Let's hear it for QE5!
Curtains being pulled back even more...Thanks Tylers
When I was a boy and worked on a farm, we had a thing pulled by a tractor that spread manure on the ground.
Today’s spread sheet seems to have returned to the golden days of yore!
Except that today’s spread sheet is the “sheet” spread by the manure spreader of old!
There are still muck spreaders - the biggest is in the White House.
That's "SpreadHEET" on ZH...
We spreadheeted some folks...
+.... -.... i do not get it, can someone explain it to me once for all, does it blowjob or not !!!?
Camelot!
...its only a model.
Maybe they should add a row "Stock Buybacks?"
So this is a good thing! Means the un-fed will unleash even MOAR! It won't make it to main street as usual and as designed.
So who will get the new "free" bucks? Wouldn't be wall street, that may look like they cozy up with each other!
These people are running well out of control!
Double FUBAR!
When they get around to giving US the 'free bucks', you'll know it's game over...
I think it could be coming soon...a last, desperate ploy to ramp up something resembling a 'recovery' in time for the 2016 elections. No Democrat wants to run during the "Obama Crash", and no Republican wants to be put on the spot as to how THEY'D handle it before the election, cause they got nothing.
Both sides would much rather postpone the nastiness until AFTER someone is in place to take the blame.
So, I think we may get our 'free checks' soon, probably by year's end...in time for Christmas shopping maybe...
I bought PM's with Mr. Bush's check...will do the same with Mr. Obama's.
Overprinting (whatever the fuck that means anymore) would create a convenient inflationary scapegoat. CNBC staffers are doing doubletime trying to find a stock photo of a Looney Tunes t-shirt-wearing hillbilly lurking the aisles of Walmart to support the caption: "Blame the people--they took the money."
Oh no!!! How will mocha Jesus spin this to make himself look good???
Time to fire up the old BERNAKE HELICOPTER
http://projects.wsj.com/games/thefederator/?mg=inert-wsj
Meh....nothing to see here....move along...
Also, S&P should be green by the end of the day. So much for ANY type of downward trend.....can't be allowed to happen!
Bullshit!!
The real question is how long can the fed fight off the collapse...??
....with bread helmets, it could be indefinite or sometime sooner
The real question is how long can the fed fight off the collapse...??
They have the invisible money printing skymachine.
"Hey Mabel load another 5 trillion in the account and send it to the cloud. Our banking friends need another shot in the ass of invisible lucre."
See how that works? This is going to go on as long as the fvkers want it too. When it all falls apart, they allowed it.
Just like last time, (great depression). Starvation is their weapon of choice.
Homeless shelters should prop up that number soon - BTFD!!
You think that is scary..you ought to see the chart of my EKG....that will get your heart pumping..
Interestingly, they dropped it from -1 to -13 in four weeks. Oh yeah really good at predictions there buddy.
Max interviews Professor Richard Werner, who, in the early 1990s, coined the phrase ‘quantitative easing.’
Together they take a look at the monster which QE has become. http://www.maxkeiser.com/2015/03/kr726-keiser-report-uks-crackhead-economic-policies/
Also see: Extending Low Oil Prices Will Kick the U.S. 'growth' Economy right in the Nuts
Nuts ;) http://youtu.be/y-zpvAS4yMg?t=7m30s.
well taxpayer (equivalent rent victims of ZIRP) have the GSE debt on FED balance sheet. In effect they have forced stock printing bubble totally devoid of reality. To quote the great George Carlin Now there coming for your pensions. https://www.youtube.com/watch?v=-14SllPPLxY
I beg to differ. I offer you the Fed's accountability spreadsheet.
.
In order to read the secret ink on that spreadsheet, you have to hold your screen over a candle.
The Fed is the modern day gestapo - lives are being destroyed as pig yellen bids this market up to hide deflation.
We're fooled yellen - no deflation - you miserable fuck!!!
Dow 20k here we come!
It's what happens when Yellen, Dudley, Evans all enrich the banksters at the expense of the muppets.
Calm down, it's just an Excel glitch.
I would hate to see the spreedsheet the Fed isn't showing us
Smoke and mirrors is all they have or fuks sake..... Just keep it quiet and it will all be fine, the last thing we need right now is any "Talking Down" of the "Recovery".
It is similar to what J Yell's "money shot" would look like from 6 inches away. And be just as ugly.
Zeroes need to thank their lucky stars for a Fed committed to printing money.
But for that, gold might well be still under a thousand.
With this kind of bad news gold should soon return to $35 an ounce.
And they took you for real?
LOL
I know that you know...
They will have to print. And they will overdo it.
A deflation ensures a US Government default.
As Marriner Eccles said back in 1941, if there is no debt then there will be no money.
Then the Government has NO REVENUE because of lack of funds. They will not be able to pay the Financing Fees on the "official" National Debt much less than that of all of the unfunded future debts that are off the books.
There are two choices.
Either the US Government defaults as a result of a Deflationary Depression
OR
The US Government first destroys the currency through a Hyperinflationary Inferno and then goes into Deflation afterwards.
It is "Political Suicide" to default on the cureent liabilities and unfunded liabilities.
Thus our glorious leaders will choose the path of least resistance, diametric to that of the WTC Towers collapse, and choose to inflate.
Let's kick the can some more. We need MOAR!!!
MOAR!!!
MOAR!!!
MOAR WOAR TO FEED THE WHOAR!!!
Coming to a theater near you soon. And every night is Audience Participation Night. Nobody will be left out of the experience of the premiering extravaganza. NOBODY.
All government statistics are totally made up or manipulated. Except for the ones that support the conclusion we already drew. Those are gospel, of course.
Falling oil prices should overall be a net plus for the economy, except when you have fracking debt and derivatives depending on 80-100 dollars a barrel oil. The amount of the derivatives is so much greater than the net benfit of oil prices, that there is a net drag on the economy.
So much for Bernanke"s study of the Great Depression, apparently all that theory is just plain old BS.
Any drop in GDP can be solved by implementing EU accounting rules. According to these, illegal drugs trade and prostitution can be added to a nation's GDP. Meth labs and Mexican drug cartels are actually good for the US economy.
Bunch o' babies! Waita coupla months untill the seasonal adjustments and readjustments even it out to new normal.
#DIV/0
that 1.2% is also a lie. intellectual property, lulz
I really laughed hard too. 8% of something immateriell is a good show.
Typical of mistakes made with no regard to "Law of Large Numbers".
You take $1.00 and increase it by 100% and what do you get?? $2.00, Neither the $1 or the $2 will get you two Hershey bars.
The same thing with 1% and 2%. While 2% is 100% greater than 1%, neither the 1% nor the 2% are indicative of anything.
And while you're digesting that bit of information, why is it that if you increase 1 to 2 it's a 100% increase, but when you want to get back to 1, you only reduce it by 50%???
huh?
Read this morning that ISIS is blowing up pipelines in Lybia and Iraq, in order to drive oil prices (and subsequently their revenus) up.
What a coincidence that this will also help drive up prices domestically in North America.
Can you say "Unambiguously good" ? !
How convenient, that there is no one that buys ISIS oil, because it is forbidden......oh wait.
Lets add underground bunkers in addition to the other structures I expect will be popping up very soon.
In other news:
UK Telegraph:
LA homeless man shot dead by police had stolen Frenchman's identity to follow Hollywood dream
A homeless man shot dead by police in Los Angeles was a convicted bank robber – who arrived in Hollywood hoping to make it as an actor after stealing Frenchman's identity
the price of gasoline is down 50 cents from $4 (rough approx) which is 12.5%. not often it comes out that neatly. there is also a hit to fixed investment, does that include royalties and such from oil wells? if they can make the case that this isn't a structural change, which it isn't probably, in other words a one time write off against GDP they can probably fiddle with the deflator, or something
they'll have to print to Dow 200,000 to keep that red limp dick arrow from dragging the ground. I bet bartiromo could make that graph sound like a friday night with a drunk prom queen.
This is the stupidest economic collapse in history. It is like watching the cookie monster run a banking system where cookies are money. Every policy he makes involves him eating every cookie.
The oil pumping volume indicates that there has been no price-line culmination in the oil patch.
Rigs are shutting down, but production is still rising.
The collapse in rigs that are non-productive on net (don't appear to have been contributing significantly to production) is just clearing of deadwood. As such it is healthy, whether or not it shocks the economy.
To get to a healthy economy such shocks must become routine. Because the fact is that sometimes investments pan out and sometimes they don't.
Sometimes you have to welcome the forrest fire, painful as it may be, because it is a necessary part of getting back on a sustainable track.
...It would be nice if we could do that in the rest of the economy! It is about the only time where I could be positive about a job loss, since it would presage more healthy future expansion, and hence better job opportunities down the road.
Have you considered demand is now collapsing even faster than the rig count?
surely this time is different!
this. is great stuff. fuggem!
It's not logical.
Oh, right...he died last weekend.
I talked with a multi-millionaire last week who is building a 500 home planned community and he said that the oilfield bust didn't matter because there is a fixed amount of money in the economy and when the oil companies don't spend it then the people who are saving on gas will spend it. I truly could not believe what I heard. Now I do not have a degree in finance as this man does and I am not a multi-millionaire but I have counted the number of trucks hauling pipe hwy 36 and I have seen the traffic on I-20 on Fridays and Sundays between the Permian basin and DFW. This oil bust will hit the Texas and therefore the American economy HARD!!!
This man is not from Texas so I do not think he realizes how many well paying jobs are connected to the oilfield at this time. Yes I-35 corridor has diversified but without the oil boom there may not be much BOOOM! Or maybe it will just turn into a THUD!
Great article.