US GDP Collapses To 0.7%, Lowest In Three Years; Worst Personal Spending Since 2009

Tyler Durden's picture

The Atlanta Fed was right once again, and slashing its forecast over the past 3 months today the BEA confirmed that in the first quarter US economic growth tumbled to just 0.7%, down from 2.1% in the last quarter and below the 1.0% expected, and the lowest print in three years going back all the way to Q1 2014.

Broken down by components, the disappoing number reflected increases in business investment, exports, housing investment, offset by a big slowdown in consumer spending. The increase in business investment reflected increases in both structures and equipment, notably a significant increase in mining exploration, shafts, and wells.

These positive contributions were offset by decreases in private inventory investment, state and local government spending, and federal government spending.

The increase in exports reflected an increase in nondurable industrial supplies and materials, notably petroleum. Also on trade, imports, which are a subtraction in the calculation of GDP, increased in the first quarter of 2017. As the chart below shows, the dramatic drawdown in trade as a result of the soybean export surge giveback is now over, and net trade contributed a modest 0.1% to Q1 GDP.

But the biggest culprit for the atrocious GDP print was the collapse in consumer spending, which rose at just 0.23% annualized, the lowest increase since 2009, and reflected an increase in services offset by a decrease in motor vehicles and parts. In short: for whatever reason, spending in the first quarter imploded.

Elsewhere, looking at PCE, prices rose 2.6% Q/Q, above the 2.3% expected, and higher than last month's 2.0%. Core PCE rose 2.0%, in line with expectations.

Once again, the bulk of the PCE growth came from rising healthcare service prices, with the rest barely registering.

Food prices increased in the first quarter following a decrease in the fourth quarter of 2016. Energy prices increased in the first quarter of 2017 following a larger increase in the fourth quarter of 2016. Excluding food and energy, prices increased 2.3 percent in the first quarter of 2017, compared with an increase of 1.6 percent in the fourth quarter of 2016.

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lester1's picture

GDP is sub 1% and the Fed is still planning on raising interest rates?? Wtf happened to "data dependent"..

 

Is the queen of the deep state Janet Yellen trying to Fuck President Trump ??

Hammer823's picture

GDP could be negative and stocks can still go up.  Individual comapnies can still be very profitable even if the overall economy is poor.  And that's a good thing, since every Government budget, Pension, 401K, IRA, and 529 absolutely DEPEND on stock prices going up, exponentially, forever.

https://www.instagram.com/the_rigged_street_journal/

Looney's picture

 

Wtf happened to "data dependent"..

They depend on the wrong data – Data from Star Trek.  ;-)

Looney

BigFatUglyBubble's picture

Resistance is Futile

(data said that, i think?)

NoDebt's picture

This number is still a "beat" (and therefore bullish).  Remember all the calls for 0.3% or even 0.0% yesterday?  That's how they play this transparently obvious manipulation game.

Beating expectations ALL the way down.

 

Hammer823's picture

 

"Beating expectations ALL the way down."

 Exactly how you can rig stock prices up forever.

PrayingMantis's picture

 

... when the US GDP takes a tumble, the (((investment bankers))) and MIC shop elsewhere ... sanctions or no sanctions ...

 

... cases in point ... and if I dig further, I'm sure there would be alot more ...

  1.  ...  "Can you name the top three investment banks in Russia?"

..."What Sanctions? JP Morgan and Goldman Sachs Are Now Top Three Investment Banks in Russia" >>> http://russia-insider.com/en/politics/what-sanctions-jp-morgan-and-goldman-sachs-are-now-top-three-investment-banks-russia

  2. ... Apr 4, 2017 "Boeing has bagged another big deal to sell airplanes to Iran." >>>

http://money.cnn.com/2017/04/04/investing/boeing-iran-aseman-airlines-3-billion-deal/index.html

""According to the U.S. Department of Commerce, an aerospace sale of this magnitude creates or sustains approximately 18,000 jobs in the United States," Boeing said in a statement."

 

   ... so there you go folks, fuck US sanctions against its "perceived enemies" if it's not a tad beneficial to Uncle Scam ...

 

... sanctions are only for pussy-grabbers and non-NWO-connected peons ... global oligarchs and (((puppeteers))) have a separate set of rules ...

 

... and btw, just for comparison, China's GDP grew 6.9% annually in Q1 2017, which was above the 6.8% expansion observed in Q4 2016.  >>>

http://www.focus-economics.com/countries/china/news/gdp/q1-growth-continues-to-surprise-to-the-upside

 

... looks like Trumpty-Drumpfty's "Team War-Mongering" is on the wrong side of the world's economic Wall ...

 

... the best part of waking up is opening your eyes ~ PM

 

;)

StackShinyStuff's picture

Among other characters.  Data said it near the end of First Contact.  Oh my god I am such a geek.

Darktarra's picture

HP stands to make a killing selling green ink to the treasury for their printers! 

Hal n back's picture

Last I looked companies need growing revenues to sustain profit growth to sustain high PE ratios.

Cutting costs and non gaap earnings can only help one time to grow profits, they need moar.

Hoever in a no growth situation, no capex means good cash flow and lower depreciation in future helps eps.

The problem with lower growth of course is the supossed loss of a high Pe.

Game over when that comes.

JRobby's picture

-0.7 

Setting up the crash? Because these fuckers have been manipulating the numbers for decades.

philipat's picture

As my first Mentor in Business taught me: "Take care of revenue growth and everything else will take care of itself".

Hammer823's picture

Catapillar revenue has SHRUNK $20 BILLION over the last 4 years, yet their stock price sits at all time highs.

spastic_colon's picture

who will be the first one brave enough to forecast the actual negative GDP?

Dr. Richard Head's picture

Wait for the typical revisions in GDP a month from now.

Darktarra's picture

So when and where does the 'helicopter' money drops happen?  I want to be there on the ready! 

Arrow4Truth's picture

Sure, "individual comapnies can still be very profitable even if the overall economy is poor," but they are not.

GUS100CORRINA's picture

Title: US GDP Tumbles To Just 0.7%, Lowest In Three Years On Worst Personal Consumption Since 2009

My response: OBAMA HANGOVER!!!!

Without OBAMACARE theft, GDP would be NEGATIVE!!!!!!!!! We all need to remember this point.

On top of the above, America is in debt up to its EYEBALLS!

philipat's picture

Yes, and the number will for sure be revised further down. The Atlanta Fed's latest number for Q1 is 0.2% after the latest inventory numbers.

Mother Fellen must for sure be trying to dump Trump with more rate hikes. She can't possibly be stupid enough to believe that" Well unemployemnt number is good and inflation is at our target of 2%" in the face of collapsing GDP demonstrates that their "data dependence" justifies further rate hikes?

JRobby's picture

Yellen is on crack (when she is not on an ether binge)

ejmoosa's picture

And that is why we are not getting Health Care Repeal.

 

Think Trump wants to have 3rd and 4th quarter GDP way negative because of the repeal?

 

Hell no.  Because the media will take that and spin it that Trump has failed economically.  

 

We are FUBAR.

spiral galaxy's picture

Gus100. - Totally agree! But Obamacare theft is still ongoing until Paul Ryan and his merry band of dipshits decide to get their ass in gear. On another tack, I'm wondering if the Obama holdovers who generate these numbers are manipulating the data. The GDP doesn't seem to jive with the jobs and earnings numbers.

ElTerco's picture

My response: Flip-flop inexperienced president is making people unsure of the future. It's like hiring an ace mechanic to be a surgeon; he just doesn't have the experience to do the job he was hired for.

junction's picture

Everything is going sideways before the failing Trump economy slides down to 2008 levels.  Trump inherited a mirage economy, where liars statistics and adjustments hid the Captain Obvious fact that without enough manufacturing, factories and hard goods made, the United States is in big trouble. 

BigFatUglyBubble's picture

Candidate Trump was correct in calling it a big, fat, ugly bubble.  President Trump took credit for and jawboned the bubble into an even bigger, fatter, and uglier one.

Not quite 3d chess level planning.

philipat's picture

Yes and he should have stuck with the Candidate position rather than starting to believe his own BS? After 100 days, things start to get blamed on him.

GlassHouse101's picture

Because the markets=the economy!!
/sarc 

yogibear's picture

Boomers are retiring in droves and so spending cuts increase.

Mementoil's picture

If the fed is unable to continue with its interest rate hikes, this is going to very bullish for gold.
Might be that final straw which breaks the back of the US dollar...

garypaul's picture

0.7% ?  Holy shit. That almost FOUR TIMES better than the estimate! 

WOOOO HOOOO! Smashing expectations!!!!

Arrow4Truth's picture

By jove, I think he's got it.

SallySnyd's picture

Here is an article that explains what the Fed will have to do during the next economic contraction:

 

http://viableopposition.blogspot.ca/2017/04/the-new-economic-normal-and-impact-on.html

 

Keeping in mind that the world's central bankers didn't see the looming Great Recession until it was on the doorstep, we should be concerned that the repercussions of their remaining monetary policy tool is completely unproven.

lester1's picture

So if GDP is only .7%, and inflation is near 2%. That means we are in a RECESSION !!!

 

Keep raising those rates Janet !! Blow up the system, media blames it on Trump, Dems make a roaring comback in 2018. Is that the plan??

BigFatUglyBubble's picture

dems, repubs, what's the difference?  different paint job?

FreeShitter's picture

JFK fucked marylin monroe.....billy c. fucked a govt clerk. Yeah, different suits and ties and lapels.

BigFatUglyBubble's picture

Also:

http://www.zerohedge.com/news/2017-03-15/what-wage-growth-real-earnings-...

Despite the surge in consumer confidence and exuberance at what lies ahead, real wages for America's average joes declined year-over-year in February (down 0.3%). This is the first consecutive monthly drop in real wages since 2011 (which forced Bernanke to to hint at and then unleash QE2 later that year).

GUS100CORRINA's picture

lester1 ... You are very correct. WELL SAID.

Of course we have theft of BILLIONS from GSEs and other sources to support OBAMACARE.

Americans have been RAPED and PILLAGED by OBAMACARE which is set to BLOW UP in MAY'17.

small axe's picture

anemic GDP is a classic contrary indication of opportunity for debt-fueled phantom growth; i.e., PRINT

-- Keynesian Evoodoomics, p666

LawsofPhysics's picture

So long as your trade partners keep accepting your currency, yes.

"Full Faith and Credit"

FreeNewEnergy's picture

I knew I should have bought more canned beets. Dammit!

chairman of the bored's picture

Better read the label on the beets......zero nutritional value....you could eat em all day and starve to death in a week!

jmack's picture

so the decreases were in reductions in state and federal government spending?  

 

1.  why is government so large that it has this big an effect on gdp?

2.  Is it a bad thing to have poor GDP numbers if its due to a reduction in governement?  Might not this be the necessary step to getting back to 3.0 and higher GDP numbers?

BigFatUglyBubble's picture

$5k to stitch up a finger is included in GDP.  "Real" economy has been and is contracting.

ejmoosa's picture

And yet the Federal Government and the government of the state of Georgia, my county of Fulton, and my city of Johns Creek are taking in record amounts of tax.

 

And believe me, they ARE spending it.

 

1.  Because they have to spend a 1.50 to get .75 cents of production.

2.  No.  Because government is friction in the economic engine of America.

hotrod's picture

We in Rabun County Georgia note that this years Federal fiscal deficit will approach 1 trillion dollars again.  So yes they are still spending it.  I think it is more like spend $4 to get $1 of additional GDP without inflation.

We all got new property tax assessments.  Fulton Taxes always ridiculous.

ejmoosa's picture

Yes and they are are already telling us without seeing the tax digest that Fulton COunty Schools will keep the same millage rate(which is a tax increase).

 

I was being generous in the ROT(Return on Theft) that the givernment gets with our dollars.