Recession At The Gate: JPM Cuts Q4 GDP From 1.0% To 0.1%

Tyler Durden's picture

We already noted the cycle-low Q4 GDP forecast by the Atlanta Fed, which in a release which came out just as the crashing US equity market closed revised the last quarter GDP to just 0.6%, which delay however according to the same Atlanta Fed was due to "nothing more nefarious than technical difficulties."

Curiously, JPM had no problems with the 15 second exercise of plugging in raw data into the GDP "beancount" model. And, according to chief economist Michael Feroli, in the 4th quarter, the same quarter in which Yellen finally felt confident enough to declare the US economy strong enough to withstand a rate hike and a tightening cycle, US growth ground to a halt and as a result JPMorgan just cut its Q4 GDP forecast from 1.0% to 0.1%, which would suggest in 2015 US GDP grew 2.3%, down from 2.4% in 2014.

If JPM is right, and if the US economy effectively did not grow in the fourth quarter, this would make it the worst GDP print since Q1 of 2014, and tied for the third worst quarter since 2009, which incidentally was our kneejerk assessment after yesterday's latest round of abysmal economic data.

The cherry on top: JPM also cut its Q1 2016 GDP forecast from 2.25% to 2.00%. Expect many more downward revisions to forward GDP in the coming weeks.

Below is a chart of what US GDP looks like if JPM's forecast proves to be accurate:

Here is JPM explaining why "Q4 GDP growth is still positive, but barely"

We are lowering our tracking of real annualized GDP growth in Q4 from 1.0% to 0.1%. Two reports out today contributed to this downgraded assessment. First, retail sales in December came in rather shockingly weak, which was accompanied by modest downward revisions to October and November retail sales. Second, the business inventories report for November suggest a fairly aggressive push by business to reduce the pace of stockbuilding last quarter. We now see inventories subtracting 1.2%-points from growth last quarter, offset by a disappointing but not disastrous 1.3% increase in real final sales.


We are also lowering some our outlook for Q1 GDP growth from 2.25% to 2.0%. While the inventory situation should turn to being roughly neutral for growth, the quarterly arithmetic on consumer spending got a little more challenging after this morning's retail sales figure, which implies flat real consumer spending in December. We now see real consumer spending in Q1 at 2.5%, versus 3.0% previously. We are leaving unrevised our outlook for 2.25% growth over the remaining three quarters of the year. We will discuss in a separate email the policy outlook, which in any event is currently being swayed more by the inflation data than the growth data.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
IridiumRebel's picture

It's a fucking recession already. The numbers are lies.
It's straight up propaganda.

Truther's picture

JPM is still making up the numbers to be rosy. It's -.01%

holdbuysell's picture

And much lower if using a realistic deflator.

Clint Liquor's picture

“Anyone claiming that America’s economy is in decline is peddling fiction.” Barack Obama 1/12/2016

KnuckleDragger-X's picture

Ayn Rand, call your office......

remain calm's picture

Obama: Jammie WTF you doing? Who bailed your ass out you pussing licking HPV sespool scumbag

Jamie: Fuck you, you wookie ape fucking liar, who put you in office? Do you want paid $250,000 a lecture in a year? Who do you think you are talking to?

Obama: Ok, Ok? I am sorry. Can you at least revise your projections up?

Jamie: We did. We really think its negative 1.7 at best.

Obama: Thanks best friend for life, lets go play golf

SDShack's picture

And all that 2015 GDP growth came mostly from 0zer0care Spending and Govt Spending! Like that's real organic growth! Just imagine what the true GDP numbers would be if that BS was taken out like it should be.

Dr. Spin's picture

The truth is treason in the land of lies.

We are no longer a nation of laws, we are a nation of men.

Stop trying to play the game and check out as best you can.

Prepare for hard times...

Pairadimes's picture

The worst part of that is that we are not even a nation of men. Our nation is infested with bed-wetting, gun-fearing, trigger-warning-needing metrosexual pantywaists suckling at the teat of collectivism like male Praying Mantises who just need to get a little before being eaten by the target of their ardor.

Without a doubt, the saddest thing I have ever seen, and that is saying a lot.


new game's picture

puss fucks with pinky finger syndrome. ok we agree.

bamawatson's picture

squat-to-piss metrosexual new castrati

Raging Debate's picture

Dr. Spin - Yep. Already built some hedges and cheked out. In my micro business things were getting bad again by the Q3. Q4 was a disaster, Q4 2008 when we had a -6% GDP print. Anyways, checked out ans got drunk and the diet suffered. I am done with that and back into the gym and reading up on science and other things of interest.

Get too bored and unhappy doing little. I do have a business I waited to launch at this time for many years. It is a $60 B market shifting into one that is a $3 B but inevitable to continue shifting. So will have to be patient just a bit longer but as an innovator it does make cranky to have to wait a year to 18 months for some of this shit to shake out. Not that it will all be roses then just a bit of daylight. Much of the prudence, bought a slightly better place in a very nice neighborhood. Enjoying the view at least a little more and I do have a nice woman so there is that.

franzpick's picture

Private or fed numbers: They're all just perception management.. The impending commodity-world trade collapse numbers will reveal the meaninglessness of expansion estimates and metrics. 

indygo55's picture

"It's straight up propaganda."

Like they can really estimate to that exact .01% or .000001% data point. Like all their models just came to this conclusion. They set the number and publish it. Is positive. We are not in a recession. As long as its positive we are not in a recession as far as the propaganda is concerned. Does anyone still believe this shit?

Are there still people who just go with this? Americans are just soooo fucking stooooopid. 

orez65's picture

"Americans are just soooo fucking stooooopid."


Exceptionally naive.

kill switch's picture

Right indygo55,


These are all plugged numbers.

new game's picture

negative is negative. face reality, the fed didn't save a fucking thing cept the club members.

not even a trickle down. so copter money for nothing- stds for free. can wait...

Galactic Superwave's picture

Analyst predicitions like this remind me of looking out the window to predict the weather. They only predict the obvious.

BlueStreet's picture

.1% will look like 10% once the energy bankruptcies start. Chesapeake is going to be a doozy. 

KnuckleDragger-X's picture

Chesapeake went off the rails when the prices were good. They must have some great blackmail on somebody to still be going.......

BlueStreet's picture

Their massive debt is probably their blackmail. Gotta wonder what Icahn is thinking. He's got some real garbage in his portfolio. 

BandGap's picture

This circle jerks just ensures these assholes can keep the revisions going until the fucking obvious is known to everyone. Then they can take their hands of their dicks and say "I told you so".

ChargingHandle's picture

You don't need a weatherman to know which way the wind blows.

FreedomGuy's picture

Iridium, recesssion? How many people think we really ever came out of the 2008 recession, at least fully? The only people I've met who will say that are hard core lefties who know it is the right answer to give since Obama is in the White House.

I think we never resolved a thing, doubled down on the bad decisions and just sort of stabilized. We stopped dropping but there has never been a "robust" economy or any other BS, Obama and his media pals want us to believe.

rex-lacrymarum's picture

The crisis has never ended - it has just been temporarily masked, papered over by a near $6 trillion (+116%) increase in the true money supply and a $8.7 trillion increase in federal debt (+92%) since 2008. Annualized money supply growth has in the meantime slowed from an approx. 16.5% peak rate in 2011 to around 8% today (still hefty historically), and that is all it took to make the cracks in the edifice clearly visible again. 

AMongoose's picture

Figuring real inflation in we have been in recession for a while now.

Truther's picture

Yeah.... for the top 1% whores.

chubbar's picture

It's called a depression. We have about 50 million folks in the soup lines (aka SNAP cards), Unemployment at 22%, give or take (U6, the way unemployment was measured in the 30's) and collapsing international trade. 

The only reason we don't have widespread recognition of this is because the media are paid hacks in the employ of the gov't propaganda machine. This is done to keep politicians in power but every day more and more are seeing through the matrix and are understanding how bad both our gov't and the economy have become. Won't be long now!

corporatewhore's picture

If you've ever had to deal with the feral FSA when the SNAP "ain't working" or the product "ain't approved (like ice cream cones)" you get a glimpse of what's heading down the road.

At my age, not wanting to participate in the knockout "game", I plan to carry.

general ambivalent's picture

Well, they just closed 269 SNAP safe spaces. And after the CRACKLE and POP cards fail we'll all be back in the proper soup kitchens.

Could you spare some HOPE for a feral fiatist? I fear my investments in the soup kitchen derivative chains (Walmart Etc. Inc.) are about to go bust.

CrimsonAvenger's picture

No, but I can spare some change for a feral fellatist. 

new game's picture

chubbar-when the petro dollar is in jeapody then it gets real...

for every force there is an oposing force. so i due tyme,

the change of the guard will come, but it will be messy to say the least..

orez65's picture

"We have about 50 million folks in the soup lines ..."

NO, we have about 50 million folks in ELECTRONIC soup lines, the kind that you can't see.

Global Hunter's picture

what is amazing chubbar is that if you point out this factual evidence of this depression to the sheeps they will just turn their backs and ignore you.  I have no doubt that if the feds broadcast out on tv and social media for all civilians to report to regional camps for their own protection that 90% would just happily go. 

When the shoe drops its going to be brutal, I live in a rural area that hasn't changed a lot in 100 years.  I've been here for 5 years having grown up in cities and suburbs my whole life I think I've made the best "trade" I could make to give me the best chance of survival and coming out the other side.

Too many people are incapable of thinking for themselves any longer for us to get through this depression without a lot of blood being spilt.  I graduated High School in 1993 and the economy has been a hopeless shit show that whole time (outside of a select few industries like military industrial, banking, tech bubble of the 90s, commodity bubble of the 2000s).

The economic datas aside, the fact that I am 41 years old and am a social outcast more or less from urban established society because I have my own opinions about things gives me the chills.  In the late 80s and 90s we use to debate things in school, our teachers were slightly anti-establishment for the most part and encouraged us to see a bigger picture (many of my teachers were really good, some sucked yes).

In just over 20 years a lot of things have radically changed socially and nobody notices or remember how it use to be? 

Cruel Aid's picture

Ditto, the big city scares me now. I do love to visit my beautiful left wing progressive city. Risk of wtshtf makes small town living very comforting. Not as many potential, non self suficient, zombie hipster idiots. Fun to look at while things are still in extend and pretend mode. They are moving to the booming 'stack and pack' housing where there is no room for tools or equipment. Very scary future there. Independence is the enemy of the you know who.

FreedomGuy's picture

There is this myth that speaking the truth is popular.

When I was very young we grew up very low middle class. However, I remember buying our first little tiny home and how excited my mom was. We just sat on the floor with no furniture and she smiled. Anyone at pretty much any wage level could find a job. People still filled up your gas tank, cleaned your windows and checked your tire. You did not get out of the car. You can ask about "fair" wages but everyone, basically anyone could make a living. If you lost a job or needed to change there were plenty of others.

Now, we talk about how many months you might be out of work. It was figure one month for every $10k you make. An unbelievable number of people are on government assistance, even if it is a scam a large part of the time. As a kid, I remember very clearly that being on welfare meant you were a failure and a dependent. By the time I was an adult is was more like a humorous game of how to live off the system, including unemployment. Now disability is the big payer.

So, the larger and more caring and more controlling the government has gotten the worse things have gotten. Only a narrow range of people are benefitting and I see that group getting ever smaller. This is on top of an $18T debt...which was zero when I was younger.   Has not really bought too much.

Lady Jessica's picture

Below is a chart of what US GDP looks like if JPM's forecast proves to be accurate:

This should then be followed by a chart depicting the accuracy of JPM's forecasting.

NotApplicable's picture

Which ones? Original, or their final after the fact revision? Q1 GDP was at 2.25%, now marked down to 2.0%. The only question is, how will keep it above zero? Powerball?

TonyRUs's picture

You will never, ever (no no no no....E V E R) see a gov't or a top financial institution forcast, or initially reported number, that is later revised UP. Ask yourself, why?

Dr. Spin's picture

...and never ever set up automatic billing with anybody.  They will screw you at every opportunity. 

F$CK .mob* and F$CK .biz

* I don't call them .gov anymore


FreedomGuy's picture

I have never seen them forecast negative, either. They've never called the start of a recession, best I can remember. They will call negative after it's started but they will essentially start a glide path back to their usual rosey forecasting.

So, if I was a weatherman in Florida and I forecast nothing but sunshine and only rain after it rained how long would you listen to my forecasts?

_ConanTheLibertarian_'s picture

correction: ...that is NOT revised up...

Keyser's picture

The only reason JPM would release this revision is that it benefits their book in some way... Much like they short the paper silver market to drive the price down, then load up on physical... 

Early Retirement's picture
Early Retirement (not verified) Jan 16, 2016 10:58 AM

The ability of shrinking economies to somehow eek out a 0.005% "growth" rate after fudging, rounded up to 0.01%, never ceases to amaze.

nmewn's picture

Only in "the world of finance" can you be 90% wrong, 100% of the time...and still keep your job ;-)

FreedomGuy's picture

As long as you still make money being wrong it is all good.

Lorca's Novena's picture

JPM from last thursday

I think Barry had a chat with them...


JPMorgan doesn’t expect a recession as the U.S. economy looks fairly strong. It also said it’s seeing a nice lift from the Federal Reserve’s recent rate hike.

22winmag's picture

I stack gold, guns, ammo, and food.

Call me crazy.