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This Is How The Much Anticipated "Second Seasonal Adjustment" Affected Q1 GDP
Much more important than the Q2 GDP print, which as we noted previously, will be revised as the wind blow first in one month, and then again, at the end of September, just after the Fed does, or does not, hike rates, what everyone was focused on was just how the BEA's "double seasonal adjustment" will boost Q1 GDP, which because it was negative would clearly have to print at least positive in a year in which the Fed is desperate to show it is in control with a 25 bps hike.
As expected, it rose: from -0.2% to 0.6%.
However, a look at the internals reveals a major surprise - while many said that the Q1 economy does not expose the true strength of the US consumer (instead of shopping in stores, they shopped online which wasn't captured or comparable), what actually happened was that Personal Consumption Expenditures as a % of GDP actually declined from 1.4% to 1.2% when netting out the harsh winter impact.
As in the real economic driver was even weaker and this time you can't blame it on the weather!
So how did Q1 GDP rise by 0.8% in absolute terms if consumer spending, that 70% driver of the US economy, declined?
Simple: BEA saw fit to boost Q1 CapEx (fixed investment) from a decline of -0.1% to 0.6%. And, the punchline, it used that traditional GDP plug, inventory, even more aggressively, with Change in private inventories rising 0.9% instead of the original 0.5% print.
Incidentally, that jump in fixed investment in Q1 was promptly nullified by the modest 0.1% increase in Q2 as oil companies put their CapEx spending even further on hiatus. Absent a jump in oil prices, expect Q3 fixed investment to print negative. As for inventories, at this moment the inventory to sales ratio is beyond ridiculous, and the only logical move next is for inventories, which rose by a whopping $110 billion in Q2 after increases of $112.8 billion and $78.2 billion in the two prior quarters, is sharply lower - a move which will likely catalyze the next US recession.
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We gamed some folks...
"double seasonal adjustment"
Now that's low hanging fruit for the fight club. The problem I have is there are sheep who believe this crap. Massaging the numbers will not make the tsunami go away, all it will do is make things much worse in the long term......
I wonder if that is like "double secret probabtion"?
Does it matter how the BEA fixes its numbers? Lies are always lies. And US economic data has been fixed since 1980.
Fake numbers, Fake market , Fake everything.
Hey - not necessarily fake - the numbers confirm that McDonalds did increase their inventory of un-sold burgers...
Fake president too.
Not everything, Mooch Obama's dick is no fake.
Welcome to the Kim Kardashian economy.....
I think the inventory numbers are bogus - sure it fakes a higher GDP but I am just not seeing much merchandise in stores these days. Lots of aisles full of paper towels or plastic tubs even if they have their own aisles elsewhere. Maybe inventories are for unsold cars? I do see lots of those...
.... And in the process the BEA gave the NY Fed, who completely debunked this double seasonal adjustment process over a month ago, the big 'ol middle finger.
"Fuck you, NY Fed. We'll print whatever fucking number we want. This is OUR turf and we'll ask you to please stay the hell off our lawn."
They calculate GDP by taking the desired result and working backwards with a bunch of bullshit.
Government data are all lies designed to placate the investors and the masses, and fool the world.
Just like everything else they do.
If "they" just make up numbers, why wouldn't "they" exactly hit "their" target every time?
That's Phase II.
Because they're not stupid - hitting the numbers is too obvious.
When cooking books, I recommend searing the outside to seal in all of the truth. Then roll in bullshit crumbs and bake at 350 for several months until the smell wears off.
The last thing people need to be doing is buying MORE stuff!
Did you know that our landfills contain more gold per ton than producing gold mines? Our GARBAGE has richer ore than many gold mines!
Seriously folks, just get a grip...We really, REALLY need to stop this shit...Our habits and waste are going to make future generations sick to their stomachs.
You know you are being gamed by the administration when the double seasonal adjustments or any other adjustments for that matter only affect the gdp numbers going forward. They will make no historical adjustments to any of the prior years gdp. Oh they will go back a quarter if they can make it look better but I guarantee they would not adjust it to the downside.
So what it amounts to is that the gdp data is no longer comparable in any way to historical figures because they have turned the number into pure fantasy.
In other words, our own government is involved in pure fraud with it's people! And WE put them there?
When the wicked rule, the people mourn!
they MUST raise rates a couple times to reflect the moderately growing economy. how else are they going to lower rates when the recession comes?
Bullshit
Nobody with half a brain believes any of these government bullshit statistics. If you want to know about the economy, drive around the area where you live. Look for empty storefronts, an increase in houses for sale, bars on windows, and number of loiterers.
Love this. Way more accurate than China's.
Which one is it, stock buybacks or inventory builds?
It seems to me that all that cheap money companies are borrowing is being pumped back into buybacks to prop up share prices that are slipping from lousy sales numbers.
GDP = Hookers, blow, and a measure of overall inefficiency and waste.