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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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Steve LIESman: "This just doesn't make any sense, the fundamantals are strong."
http://nypost.com/2015/05/28/man-falls-to-death-outside-luxury-building/
welcome......to the machine
https://www.youtube.com/watch?v=NCfVFxRsKQc
It's not the weather, we should blame the inner city yoots because the were protesting the killing of a black man by black police by burning down the black businesses so now they have no place to use their EBT cards. Can I get me an Old English 800 40 ouncer here?
We'll NEVER hear this is the Propaganda Press! They are determined to perpetuate the "all is well" illusion.
Remember when Bill Gross told us we have been "lulled into a false security"? Yup!
When the appearance of or actual economy does better, views and comments on ZH fall, when there is a downturn ZH views and comments rise.
Many people writing comments have admitted they are not making as much or are unemployed.
This site came to being around the time everything was falling apart and I am thinking ad clicks is keeping them going.
Many people have gone online looking for relief as brick and mortar anything is not offering a lot nowadays or so it appears.
I still work but making less than half of what I used to. I am comfortable but do not spend near as much either, affecting the overall economy. Over the course of the last few years the biggest provider seems of decent jobs seems to be .gov or anything to do with .gov, such as healthcare, regulation etc.
Just watch the views and comments on this site over the next number of months to get a real indication of where the economy really is. If everyone was working they would have no time to drop in here.
" If everyone was working they would have no time to drop in here."
??
Worst assessment possible.
Productivity should rise next quarter
Another blood sucker is gone
Put some Anthrax inside every welfare check and things can really start hopping
REPORT: A 29-year-old investment banker died after leaping from his Financial District apartment buildingOh the humanity.
Jeez! considering how much they twist and torture those numbers the real gdp must have been terrible.
factor out consumer spending on Obamacare which is a pretty much a one time blip, like what you get when you monetize a bond into the market, there's that initial flush of cash, then some action while the money circulates a while, and then the interest to try and pay the thing off drags you down into debt hell. the people on obamacare are heading there.
https://biblicisminstitute.wordpress.com/2014/07/17/is-america-cursed/
This should not be a surprise to anyone here.
There is SOME good news this Friday morning, another banker makes the supreme sacrifice...
Banker tries to be Superman, fails.
What if it is all just a Hologram.
What if we believe whatever the press & government print out or make bullet charts for.
What if Corporate Profits are made to look low, so they don't have to pay the whole 12% Income Tax.
On ZH I can be a devils advocate and question all reality.
Maybe one of ekm1's military black ops guys threw the banker off the roof with a hologram to cloak him from security cameras and potential witnesses.
Was just thinking the US Economy might be a target for some powerful people that would like us to look like post WWI Germany.(what with Investment down, velocity down, savings down, credit up for 12 years, and Dollars flying out of the Economy)
I recall when I was younger that people used to be able to handle bad weather, bad news, financial difficulties and the like without going crying to mommy or thinking that it was the end of world.
Admittedly, there was not, at the time, an understanding that our world and especially our economy is being managed by a group of completely interlinked parasitic psychopaths, but we were able to take everything they threw at us and still have hope.
Do we really need to get rid of the parasitic psychopaths? Maybe, maybe not. Do we need to reduce their power over us? Absolutely!!! ... so that we can return to a hope-based instead of a fear-based society.
Personally, given time I believe this will happen naturally and culturally and we will emerge more resilient to propaganda and other mind control tactics. They, not we, have only a narrow window. We are the ocean. They are the tide.
OT. No ZH on this yet?????????
http://www.wsj.com/articles/epas-amphibious-attack-1432769456
http://www.latimes.com/nation/nationnow/la-na-nn-epa-clean-water-act-201...
So with all the adjustments and massaging of the numbers, we still get a negative print?
You can bet the real news is much worse.
And all this is happening with near zero interest rates.
What little credibility the FED has left is about to get eviscerated. They are completely trapped.
When the markets finally collapse, it is going to be something never before witnessed.
I couldn't find one ounce of truth in this Q1 economy article: http://www.nytimes.com/2015/05/30/business/economy/us-economy-gdp-q1-revision.html?_r=0
anyone else want to give it a shot
This is the result of Trial Lawyers/Attorneys running the country....50-55% of the House and Senate are Lawyers....This is a fact...Highest ever in the history of the U.S...Remember lawyers protect Lawyers regardless of party affiliation...Oh, and they protect the Bankers as well...Where's John Corzine? shhhhh, he's a lawyer too......
But I thought they were going to double-adjust those first quarter numbers?
I think they're going to add two days to the first quarter, that should fix it.
So OK, where's the video of Adolf Hitler learning about the first quarter revisions?
Perfect time to raise interest rates.
Bullish for Q2!
Cue Kerry for a "There wwill be costs" speech, followied by sanctions against his hairdresser. Why the long face John ???
Didn't they change the way GDP is calculated LAST YEAR (to include hookers and blow), so that a negative GDP print would never happen again?
There are three kinds of lies: lies, damned lies, and statistics.
just wait until they start applying the new dbl plus good seasonal adjustment-then everthing will be awesome!
Financial Advisors have not weaned from garbage advices based on latest aggressive econ data (never mind that they get marked down thru revisions). Worse, they provide garbage opinions adre every dauly moves (up/down).
These are like drug mules where Sheepies (plenty) just need the fixes. Still a lucrative business to be in with no accountability for performance. But the sheepies endorse it.
Just fix your Algos to discount the fairy tales and let it go
ooo oooo oooo, I know the answer.. . . . No more QE!!!!!