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"Welcome To The Contraction": Q1 GDP Drops By 0.7%, Corporate Profits Crash
And you thought the preliminary 0.2% Q1 GDP print from last month was bad. Moments ago, just as we warned, the BEA released its latest, first, revision of Q1 GDP (pre second-seasonal adjustments of course), and we just got confirmation that for the third time in the past four years, the US economy suffered a quarterly contraction, with the Q1 GDP revised drastically from a 0.2% growth to a drop of -0.7%: the worst print since snow struck, so very unexpectedly, last winter.
Incidentally, there has not been a US "expansion" with three negative quarters in it in the past 60 years.
Worse, the breakdown shows that far from being a non-core slowdown, consumption rose just 1.8%, below the 2.0% expected, and contributed just 1.23% of the bottom line GDP number. This was the worst Personal Spending contribution since Q1 of last year, when revised GDP dropped by -2.11%.
What is disturbing is that as noted before, inventories contributed the biggest component of Q1 GDP growth, adding $106 billion in nominal "growth." Without that contribution, annualized GDP would have been worse than -3%!
And worst of all, was the plunge in corporate profits. According to the report:
Profits from current production (corporate profits with inventory valuation adjustment (IVA) and
capital consumption adjustment (CCAdj)) decreased $125.5 billion in the first quarter, compared with a
decrease of $30.4 billion in the fourth.
Profits of domestic financial corporations decreased $2.6 billion in the first quarter, compared with a decrease of $12.5 billion in the fourth. Profits of domestic nonfinancial corporations decreased $100.4 billion, in contrast to an increase of $18.1 billion. The rest-of-the-world component of profits decreased $22.4 billion, compared with a decrease of $36.1 billion. This measure is calculated as the difference between receipts from the rest of the world and payments to the rest of the world. In the first quarter, receipts decreased $28.9 billion, and payments decreased $6.5 billion
Or visually, here was the third largest corporate profit crash since the financial crisis:
In short: welcome to the recession, which however will soon be double seasonally adjusted into another flourishing, of only stiatistically, "recovery."
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gee, who woulda thought the tax and regulation stimulus wouldn't work...
What's this "profits" thing?
Just BTFD!
If anyone survives the coming disaster, it will be the corporations. People have just become a number...people come and go...but the corporations remain!
With so much cash, there is almost no way that the corporations can collapse, because the Govt, the tax man, the SEC, the judiciary, the police, the FIFA....even the movie stars and sports stars.....everyone supports and obeys the corporation!
Corrupt eilte rule the world!
Just STFU!
Oh yeah corporations... duh duh duh...
No one could see that coming.... How many times have we heard that
Layoff List: http://www.dailyjobcuts.com
-
But there was no contraction w.r.t. government programs, budgets, etc. In fact, wasn't there record tax collection and record spending? That's all that matters in the eyes of .gov.
If the BLS doubles their winter seasonal correction up, won’t they also doubly correct the summer down? No guesses please, only answer if you know for sure.
The correct answer is that they will come up with any number that supports whatever counterfeiting policy they want to parasitize us with. Please refer to the fact that they've narrowed the data used to compute inflation recently too.
http://www.bls.gov/cpi/cpinewest.htm
They are protecting the value of the dollar and propping up the stock market, which are the last legs holding it all together. If the stock market falls they really can't pump it back up (short of causing hyperinflation, which they do not want to do).
https://www.youtube.com/watch?v=mYajHZ4QUVM
I am Jack's raging bile duct....
No gas or food in the CPI, and it's chained. No long term unemployment measure to U-3. The wars in Iraq and Af/Pak rage on (military spending has increased under Obama). The POMO desk rolls on buying toxic US debt with future tax payments. Old people think their pensions will save them and young people can't pull their heads out of their cell phones.
Yeah, everything is awesome.
But what if I'm reading ZH on my phone?
Joe Lavagina says that GDP is understated. Yes this is a joke but it's also true.
It's been a tough quarter with the rise of ISIS and ongoing aggression by Russia. Economists had no way of seeing these international conflicts in advance, which may have resulted in some uninformed economic policy. I expect Q2 GDP to resume its positive upward trend as our government and Federal Reserve adopt more apropriate fiscal and monetary policies, and green shoots continue to emerge.
You'll have to extrapolate; just how has ISIS and Russia affected GDP?
If you want to troll, troll hard.
"Green shoots"... lmao. Atta boy MDB. Or is it green chutes?
And BTW, the sign on the wall as you enter the FED building says "interest rates will rise tomorrow". So yes, I'm with ya and not a fool either.
Heading into the Recovery Summer number... six?
<sigh...>
Welcome to government economy strangulation. If we only had more regulations (costs forced on businesses) and higher pay (price increases on U.S. made products)...
At least government employees and government connected are still doing incredibly well - at the expense of everyone else.
It's important to remember that Satan enjoys anal sex, so please try to avoid it. Thank you.
MDB doesn't troll hard, he trolls with effortless panache.
You left out China building sand runways in the Spratlys.
Yay he's back! !!
You guys gotta read this. We are officially turning the corner according to market watch
http://www.marketwatch.com/story/the-economy-actually-is-not-in-a-recess...
And when the " positive upward trend " doesn't resume in Q2 will you remind us? or will you just bring happy meaningless paragraphs that have zero substance? IE ISIS aggression...
We do need more confetti for New years
The real reason for this is the bad weather. This winter was cold and snowy. Now we are seeing a lot hot weather this spring.
Just remember, who puts the BS in BLS! There is nothing to see here ... they still have one more month to 'fix' this ... a pinch of seasonal adjusting here, a dash of channel stuffing there, then throw in some bad weather and presto! ... that number will be back in the green for the 'final' reporting next month ...
This is all part of BLS's long-term plan to groom their seasonal adjustments, such that come October 2016, they'll be able to juice the numbers to boost Hillary's chances.
We need a blizzard hurricane earthquake and a super volcano. ...
Or just Moar Cowbell!
. dupe
I agree but the one outstanding question is, where will ZH have it's victory party when the whole thing crashes to 0?
The 4 Seasons?
Well, not really unexpected since it's hot in India and rained in the Amazon.
Hedonistic Adjustments, Bitchez
pass the Treacle
kicking stone, hands in pocket humming Against the Wind
CNN: don't panic :)
http://money.cnn.com/2015/05/29/news/economy/us-gdp-negative-first-quart...
Obamacare will save us.
The good news is that although every productive person in the US is being taxed, fee'd and utilitied into complete serfdom, that SSRI drugs which cost almost nothing to produce by big pharma are almost free to the Obamacare masses.
SOMA, anyone?
Pharmaceutical products are relatively cheap to produce, but expensive to research and bring to market. Only 5% of products make the money back that was spent researching it. Get a clue buddy.
The rest of your post may be accurate.
yeah, ok.. so it takes $400M to make a drug that produces hundreds of billions in .gov taxed and subsidized misdistribution, and is authorized by our wonderful FDA..
http://www.bad-drug.net/bad-drug-list
It does take hundreds of millions to research and bring a drug to market. Some drugs (very few) are "blockbusters" and make billions, but like I said, 95% don't even make their money back. Also, try a little harder to get that clue. Your link wasn't even relevant.
Poor, poor pharma giants. Doxy has been around for decades and now it's through the $$$ roof. The profits are obscene.
When a drug costs 30 times what it once didhttp://articles.latimes.com/2013/mar/07/business/la-fi-lazarus-20130308
gimme soma dat
.
Why, then, this qualifies as an economic miracle! The US economy simply refuses to stop expanding!
Look outside, everybody, it's snowing green shoots, and all the bowls of porridge are Juuuuust Right®!
Glory to Krugman! To the printers glory!
The economy is so great I'm starting my Christmas shopping right now!
Your comment made me wonder: just how many of today's youth can identify the reference to bowls of porridge? I remember a few years back (20 or so, actually) I was working with a group of Hispanic immigrants (legal, nice people, no disrespect intended here) and made a comment including "in for a penny, in for a pound". The cluelessness on their faces indicated a serious cultural gap. Speaking with 20-somethings today - mostly my son's friends - makes me often feel the same way.
No, it's the debt that will outlive us all.
When the human race is gone from the planet there will still be banks and computers shuffling our debt back and forth for hundreds of years, desperately trying to preserve liquidity in a system long dead.
@NoDebt
That is very very funny
Those banks and computers ..... made bye who Apple? Microsoft?
or China?
LOL
Skynet. That's why we won't be around any more.
There is classic Sci Fi book you may want to read. A Canticle for Liebowitz by Walter MIller.
I've read a few times, starting with a college assignment last century. It is a great story of the folly of man versus God/Nature, and how Mankind continues to think we are supreme but we continue to repeat our behavior and lead ourselves to self-destruct.
RE: In this case your comment on debt. Debt will outlive us.
NoVa
I'm somewhat of a math whiz so I think a drop from 0.2% to -0.7% is equal to a -0.9% drop. Just sayin'.
Don't mean to pile on, obviously this country has some work to do.
An inventory build is bullish actually.
The product has been paid for so that does represent actual payment in cash. Since anything that's sitting on the shelf or in the tank is pretty much worth zero that's a powerful incentive to start moving product going forward.
The most powerful actually.
And of course the best way to do that is to start hiring..."putting people back to work" as it were.
Hard to see these big price moves holding that we've had this Spring but we'll see.
Sears Holdings has had a huge run...
So you're saying that all that debt being accumulated now won't fall on the shoulders of our progeny but rather on some robots/automatons? In that case, let's cut taxes and let the government borrow everything it wants to spend.
Corrupt elite ruin the world! (There, fixed it for you...)
Only the coprorations that obamatron assclown progressives like will survive like big medical (obamacare anyone?) or the secret corporations in obamas secret trade deal and of course the super favorite darling of the the criminal progressive elite, finance and banking corporations, where execs can do no wrong and taxpayer money will bail them out.
Embrace the progressive suck dude, there is not a constitutional conservative anywhere directing this crime show.
Grimaldus
Government
Data
Propaganda
Projected
Rate
Of
False
Investment
Targeted
Suprise!
If you're going to use that much real estate in the thread could you at least have the courtesy to put up some nice porn shots?
@No Debt
You mean this type of porn?
https://www.google.co.uk/?gws_rd=ssl#q=pictures+of+nail+guns
or this
http://www.tradingeconomics.com/
Chart Porn?
Nothing here that a third seasonal adjustment won't fix.
But actually, he thought as he re-adjusted the Ministry of Plenty’s figures, it was not even forgery. It was merely the substitution of one piece of nonsense for another. Most of the material that you were dealing with had no connexion with anything in the real world, not even the kind of connexion that is contained in a direct lie. Statistics were just as much a fantasy in their original version as in their rectified version. A great deal of the time you were expected to make them up out of your head. For example, the Ministry of Plenty’s forecast had estimated the output of boots for the quarter at 145 million pairs. The actual output was given as sixty-two millions. Winston, however, in rewriting the forecast, marked the figure down to fifty-seven millions, so as to allow for the usual claim that the quota had been overfulfilled. In any case, sixty-two millions was no nearer the truth than fifty-seven millions, or than 145 millions. Very likely no boots had been produced at all. Likelier still, nobody knew how many had been produced, much less cared. All one knew was that every quarter astronomical numbers of boots were produced on paper, while perhaps half the population of Oceania went barefoot. And so it was with every class of recorded fact, great or small. Everything faded away into a shadow-world in which, finally, even the date of the year had become uncertain.
1984
I've shown various people a chart of GDP to debt, how the 2 diverged in opposite directions in '08 and continue in extremis. most have no idea why this is important, and how it can only result in a default or repudiation of the debt.
Meh another half a million in student loans with 84 month auto financing will triple that number!
A Little Recession (TM) inside the Great Recession (TM, patent pending) should be good for more recorder highs in ES/Russel/Nasdaq, et. al. BTFD is the new national anthem, beats "We Will Rock You!"
Illegals should be able to vote according to a poll of democrats. OK, but they will never pay taxes or carry health or car insurance like citizens are required. The Democrats only push for more benefits but never face the issue of who pays.
"We GDP'd some Folks"
ZH was right about the inventory build.....way ahead, Tyler.
Schiff has been saying that for months as well.
Schiff has also been predicting QE4 (QE4EVA) once it's clear to the FED we are in another downturn. I'll give it until late Summer before Uncle Yellen ramps up the printing press...
The stock market must not be allowed to go down comrades !
I don't know how much longer I can take this extend and pretend bullshit!
You'll take it and you'll like it. Got that mister?
Clearly they aren't printing enough. If only they would have listened to Krugman and printed moar. When will they learn, moar is never enough?
I think we all agree it's time for the Fed to raise rates.
Not Krugman! Give him negative rates or give him death!
:)
I won't have OD on Heroin if only I had taken more!
.
Plan B: moarer!
If they print me some, I'll spend it.
That is my pledge to them.
BULLISH
so the Fed is going to Raise Rates into a negative GDP print?
Granma blames it on a transitory strong dollah in ... 3 ... 2 ... 1
Musta snowed in Canada during winter too.
http://www.bloomberg.com/news/articles/2015-05-29/canada-s-0-6-gdp-contraction-is-most-since-2009-on-investment
And a million Algo's subroutines screamed out buy all things......
just change the model, fixed.
Seasonally adjusted, seasonal-seasonal adjustments. Then average the daily average twice a week, then average the monthly average +1. Done.
coporate buybacks should keep the stock prices high...and EPS looking great....but the strong dollar and regulations are killing us
"coporate buybacks should keep the stock prices high...and EPS looking great....but the strong dollar and regulations are killing us"
Strong dollar *giggle*
You meant, "stronger" than the rest of the currencies that engaged in the race to the bottom. FIFY
Seriously, this is nothing - the new adjustment model will make it all better. Go to the Keys.
Do I hear QE4 coming.
Ever larger QEs.
Double up on the QE. This time $170 billion/month.
The debt addicts need ever larger QEs to keep functioning.
QE4? There have been so many QELites and QE Twists that we entered QEINFINITY long ago.
Next QE will be the bail out of state and local giverments....
Think ELECTIONS.
the worse 2015 looks, the better 2016 looks by comparison.
(you take out 100bps of gdp today, that's 100bps less 2016 has to grow to be "positive")
It's all good. China will BTFD.
If the GDP deflator wasn't rigged, the "data" would show a continuous recession/depression since 2008.
If the GDP deflator wasn't rigged, the "data" would show a continuous recession/depression since 2000.
There fixed that for ya.
John Williams' Shadowstats blog has all the analysis. Good stuff.
The term "Corporate profits" is misleading. It should be called "Business Profits" because it includes all businesses. The First implies that it is only corporations.
And you are late to the party. For the four quarters ending 12/14, business profits after taxes were down 8.29%.
Profits after taxes were actually up for the first quarter relative to last year by 2.04%
Profits before and after taxes were both higher than for the same quarter 1 year ago.
Businesses are in the process of "right-sizing themselves to return to higher profit growth. And most of us know how they will do that.
Here are two charts if you are interested. The second is the profits after taxes for the last four quarters back to 1994.
http://ejmoosa.tumblr.com/post/120184187339/year-over-year-business-prof...
http://ejmoosa.tumblr.com/post/120184933079/profit-growth-after-taxes-la...
Everything is awesome. Welcome to the MATRIX.
I guess Liesman will recommend a triple seasonal adjustment on this news.
In the meantime smaller packaging of goods to eek out ever more profits.
Time to boycott those goods.
I know that this is stating the obvious, but as long as online shopping continues to grow where comparision shopping for lowest price is so fast and painless, we'll get lower prices. I've tested the waters of online retail. It's a race for the bottom. Very thin (if any) margins. Many months, the best you can do is get some good tax deductible benefits.
Race to the bottom.
Hillary as new president can fix this XD
What... you still take any numbers handed out by the oligarchy as legitimate?
Real Figure= -2 /- 2.7 % The global financial structure remains on life support appartus. Zero organic growth.
That is all.
Kicked can gets stuck on curb...
Yellen and Krugman try to figure out if dent in aluminum is somehow good for economy.
Dovie'andi se tovya sagain (It's time to toss the dice)
Got Karatbars?
Don't Worry! The stawk market is 'forward looking'. So, with stawks at all time highs, this is all priced in, right? RIGHT?
Sure looks like a Depression to me.
Just think how much worse things would be without Obamacare levitating our economy. Our Kenyan Messiah's master plan for hope and change is our only chance. Unaffordable and unusable health insurance and ISIS are just two facets of his superior plan. He's a Nobel Peace Prize winner you know.
One of my business clients has seen their company's health coverage costs increase 50% each year for the past two years.
Unfortunately, we're going to have to augur into the ground.
i know the economy is bad by how the hotels treat me. when times are phat even sucky rooms are outrageously priced if you can get one. however, in lean times it is way better. in 2009 i booked a reasonably priced room but when i got there they moved me into the best room in the house. it happened again recently so i know it isn't all sunshine and roses out there.
The hotel was overbooked and they were hoping for a cancellation before giving away the "best room in the house". You got lucky or unlucky depending how cheap you are. If someone reserved that room, you would have been on a bus to a nearby hotel where your room would have been comped.
+1 what an awesome indicator Buzz. you can't fudge that data point.
QE5. Save McDonald's with $15/hr to boost share holding expectations, until sales forecast fall off the cliff.
yeah, the ceo is the only one worth a damn in any corporation. they are like 10,000 times better than all the other low lifes working there put together.
Cook a burger on your grill. Fuck fast food bullshit. Our society is lazy.
oh i don't eat there. yuck. you think i'm going to let those scumbags handle my food? ew, gross. that still doesn't make the ceo any better than the rest of the disgusting employess who serve that crap.
F/X is completely fucking detached from reality. Bond yields are lower and the macro is shitty yet usd/jpy goes bid. You can see the panic buying on the last day of the month.
Government numbers can't be trusted, right Zeroes?? So why do you now choose not to question these? Is it because the numbers confirm your "the world's going to hell in a hand basket" bias?
Idiots....
if they are willing to print a negative number you can bet your ass that it's way worse than that.
It's the old Wall St. adage of "if the numbers are that bad, how bad would they have been if they hadn't tweaked them?"
if those are the triple whammied double seasonally adjusted numbers how bad is the real deal?
Just move the decimal point a teeny bit to the right...
It's all a big conspiracy, huh? :-)
Zero Hedge thinks it's the arbiter of truth, telling us which number sets are believable and which are not. Invariably, the numbers that suggest the economy's either in or headed to the toilet get the seal of authenticity and the ones that don't follow the narrative are discarded or proclaimed part of a "conspiracy."
Holy fuck!! Its Paul Krugman! Or is it? I mean - it sure sounds like Paul Krugman because thats what annoying pieces of shit sound like.
TheFourthStoog-ing - not to be confused with longtime ZH poster TheFourthStooge-ing (note the 'e') is the latest user account of the multiple-time banned user Amerikan Patriot (aka iofera).
So your stupidity and primitivism increase significantly...
The weapons trade has slowed down!
What an annoying motherfucker.
Are you suggesting .gov would fudge the numbers to the downside?
Only if the Big Boyz have loaded (up on) their shorts.
Because the offical gov figure will inevitably be revised downwards in due course. In that sense the current one is a useful benchmark.
You must be Mr. Yellen's bottom bitch.
Becaue, you brain dead Kenyan faggot monket cim sucker, we on Zero can read fucking accounts and can also calculat
FUN_DER-MEN-TAALS
Want to jump start the real economy - suspend payroll/income taxes for 3 years.
Want to jump start the economy? Suspend payroll/income taxes forever.
Aw you beat me to it storm trooper. Along with that solution just convert the tax code to a Flat 15% for businesses and corporation and institute a consumption tax that is half state and federal. Make the politicians accountable for not paying the government for once. If they fuck it up or corruption is involved not only do you lose your job but a mandatory. 20 year sentence in the federal pokie in the butt.
Put the fear of going to prison on the people who should have that stress placed upon, not the people who pay the fucking check.
too late, regulations strangling merika. suspend .gov for 3 years
Eliminate income taxes on businesses altogether.
The trillions offshore are returned for investment.
No more games with earnings. The bottom line will be the REAL bottom line.
We already know that every business tax sooner or later is paid by the individual anyway, so it's just a shell game at this point.
Three years ago I would have been shocked but after being an avid reader here all I can say is, how could anybody NOT know what was going to happen? If I had cable I'd put on CNBC just to watch Steve Lies-Man turning purple as he tries to spin this into something positive.
So, will metals prices go up or down because of this, today? Because I have to sell some, today. What *time* of day would be best? Earlier? Later?
never a good time to sell metal
Wait till the adjusted (i.e.real) figure comes in.
Wow, just wow!
As the tide goes out the criminal bankers will fall like rain.
http://nypost.com/2015/05/28/man-falls-to-death-outside-luxury-building/
Junk bonds, dot.com blow-up, i didn't have sex with Monica, 911, go out to spend money, Libor default, and we are going to charge banking debits.
Look at the Bank of International Settlements.
So of all the candidates running to capture the Presidency who has any solutions that can WORK? or do we have to endure another 12 to sixteen months of bullshit media about stupid issues such as gay marriage or other wedge issues. Tackle serious problems people. We are in a depression and have been. The old solutions don't work. Come up with some new ideas and get us out of this mess
I'm predicting another 16 months of media bullshit, followed by another 16 months, groundhog day.
Corporatewhore - The US has been structurally impaired based on 40 years of bad decision making. It is going to be a good decade more from here of LOG (low organic growth). Big problems such as demographic imbalance (older folks downsize and get benefits with less people to support it) and trade imbalance are major headwinds.
Still, the US as a banana Republic still is a pretty big banana and it need not be complete disaster. However, until politicians go to jail again for accepting bribes from corporations, there is a much higher chance of continuing to become Mexico over the next couple of decades. Based on an expensive cost of living and low wages, we're well on our way.
This is a very weak year so far for my business, but I learned during small spurts of activity to bank for the next nasty slow periods. Plus I turned my small business into a micro-business, use every tax loophole available and do far more grunt work myself. It is not easy, that is for sure.
Here's some good news... It certainly made my day after wanting to throw Liesman in a wood chipper after the GDP print.
Banker jumps to his death from luxury apartment | New York Post
why is it always bankers? You ever hear the following
plumber jumps to his death from high rise
hair dresser jumps to her death from tower
McDonald's flipper jumps to his death (he really should)
Auto mechanic jumps to his death from the top of a bus
and they say marijuana makes you do crazy things, try drinking the banker coolaid.
Evidence of a looming deflationaryy depression just keeps mounting. This print is further confirmation that the vortex is spiraling out of control...
http://www.globaldeflationnews.com/inflation-vs-deflation-part-1which-on...
Fuck yeah, I've been doing my part to bring down GDP for a long while. Glad to know the rest of Dumbfuck USA is finally waking up a bit.
This has NOTHING to do with stock prices
Shemitah! I'll jump in with both feet and call the next market collapse in September. You and I don't have to believe in this hocus pocus but the bankers of that tribe do.
https://www.youtube.com/watch?v=T5M7NngNW70
Just the Jewish Banking Empire under Rothshilds at work - Empire is growing in strength and the GAME gets stronger! They use this fable to keep the plebs obedient and multiplying!
If the numbers don't fit you must resubmit ..
Numbers = shoes?
You can't pollish a turd but you can roll it in glitter.
spray paint them with gold flake and sell them at the flea market. After all people buy "proof struck' coated with .000000000000000000000000000000000000001% 24 carat fine gold tin trinkets for 19.95 each, especially when they are strictly limited to 5 per caller.
GET UR GOLD PLAINTED SHIT HERE, only 19.95, strictly limited to 2 per moron.
I want you in the Republican candidates debate!