Biderman: "We Are In The First Quarter Of The Next Recession"

Tyler Durden's picture

Rick Davis of The Consumer Metrics Institute plays Clark Kent to Charles Biderman's Superman as the two dig into just how manipulated and misreported the latest GDP data from the government was. Critically, they break down the components and using inflation levels (CPI-U or The BPP) that make some sense when considered with energy price movements during this quarter (as opposed to the deflator that was 'selected' by the BEA) Davis and Biderman are "really worried" that the real economy appears to be in a contractionary state if inflation is adjusted for correctly. Even the anemic 1.88% growth rate is 'very very poor' for an economy that is supposed to be 3 years into a recovery. The per-capita income (the money available to all households to spend) actually shrank - even using the BEA's inflation data. This juxtaposes shrinking household disposable income with a real economy supposedly growing (though slowly) which was driven almost exclusively by consumer spending - leaving Davis and Biderman questioning 'where this money is coming from?'. The simple answer is the savings rate has plunged, freeing up over $200bn in annual spending (and student loans have added another $100bn, refis $50bn, and strategic defaults $80bn) - all unsustainable one-time increases. This is what is really scary behind the GDP numbers. Spending is not coming from income. While much is made of the drop in spending driven by the fall in oil prices, Davis points out that the consumer is hitting a wall with his savings and concludes that the BEA is notoriously bad at calling turning points (only getting the Great Recession 'direction' correct after 16 months and magnitude after 40 months) - leaving him of the opinion that we may well be in the first quarter of the next recession.



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ReactionToClosedMinds's picture

I'm surprised no one has made a bigger deal of what Barron's reported 2 weeks ago via their weekly statistics tables catch.  After some considerbale examination of drop in electric power use .... they dug in deeper and it was clear that for some 'mystreious' reason, electrical use is off 1.5% ... which is a lot.  After every possible explanation ... the obvious question to anyone, which they tried to understate, was that a recession may already have started

slewie the pi-rat's picture

1.5% over what period of time?

do you mean to tell us that power usage has gone down since people took down the holiday lighting and the sunlight lengthened & strengthened? 

and those new $7 light bulbs and low-amp everythings actually work?

and that we're in a...  recession?  yup!    ZIRP4evah!  L0L!!!

ReactionToClosedMinds's picture

they factored in max impact of new light bulbs & energy efficient appliances.

The power drop is last few months.  Barron's reports a lot of econ activity statistics.  The Statistics Editor and a reader caught the unexplained recent drop off.

This is not some bogus argument.  As far as I'm concerned this is one of those instances where you have what everyone says they want ...actionable data.  Yet this intriguing piece gets a big yawn.  I guess my mind is weak compared to the hedge fund trading titans.

In fact I wouold have thought ZH would have picked up on this immediately as this some hard evidence to back up ECRI's view

slewie the pi-rat's picture

who cares about ECRI's views?  this is zH

actionable data?  this is zH

we've been in a recession since 2Q 2011 as far as i've been able to tell;  ive been saying so for over a year;  tyler hasn't argued has he?  rosie? 

so now people are starting to notice and it is actionable?


b/c electric use is down?  L0L!!!  of course we're in a recession!  are you fuking mad?

you're not on cNBC dude!  this is zeroHedge!!!  adjusted for inflation we have been in a recession for a fuking year+ and that means:  yup!  we are in a recession right NOW!

you've been here the whole year, man

congratulations!  you figured out we're in a recession all by yerself!  L0L!!!

ebworthen's picture

Isn't spending what you don't have the government/bank/corporation model?

Even dumb monkeys and dim-witted sheep can mimic observed behavior

slewie the pi-rat's picture

hey, eb!

actually, i'm getting indications that the goobermint/bankster/corpofascist model has gone to:  survival, BiCheZ!

so yes:   Even dumb monkeys and dim-witted sheep can mimic observed behavior

unfortunately, they have neither precedent, nor practice to guide them, so it is just a cartoon of FED-watching pryamids of competing commercial, social, and political IOU-based interisks, olivsk

Pretorian's picture

Biderman next move is puffing the magic dargon! Watch out for more hardcore clips to come.

falak pema's picture

recession is like secession, never accepted by the majority; those who are politically correct. "We are not in recession we are in deleveraging, its not the same thing." Really? All deleveraging means is that the socialisation of debt continues, the privatisation of profits as well. This guy Usmanov made a killing from Faceflop, where all other late comers, got sucked by the scam. That's globalisation sleight of hand and market deleveraging working hand in hand,"you lose suckers, we win as Oligarchs, we know how to read between the lines!"

 If the market is in obsession with avoiding recession, if the obsession becomes paranoid and voids the  checks and balances, to feed the money printing asteroid as it bursts not the fiat bubble but more honest labour toil to feed the unemployment cauldron worldwide, negating reality in absurd virtuality, we will all  cry secession to Oligarchy possession of our real lives. A poet of the absurd becomes a patriot of the untold truth, a nemesis of the blatant lie. 

AgentOfNaturalSelection's picture

Has anybody ever calculated what the average person under 34, millenials I suppose, are being taxed?

Medicare/social security+payroll taxes+student loans= I am going to cut open a fat old person like a tauntaun and sleep inside him when things get scary, because I PAID for that fat; mother fucker.