Since It Is Now Cool To Downgrade The US, JPM Just Became Da Fonz: Feroli Cuts Q1 2012 GDP Forecast To 0.5% From 1.5%

Tyler Durden's picture

Now that even Joe LaSagna is no longer imbibing the Kool Aid, and is scrambling to regain some credibility by enunciating such occult (for his mouth) words like "recession" and "downturn", it has become all too obvious, that just like in August of 2010, right before Jackson Hole 1.0, the scramble for who can downgrade the US in the most unique, bizarre and sadomasochistic fashion is on - these people need to get paid after all, and without the Fed cutting checks, they may all have to face comp committees that demand to see performance. Alas with everyone on Wall Street missing today's Philly Fed by eight unbelievable standard deviations, base comp is all said economists can hope for. In other words, and as predicted over and over and over, the scramble to make the baseline case a recessionary one, is here. And since it is now cool to be pessimistic again, here is JPM's Michael "Fonzarelli" Feroli who just projectile vomited all over the US' growth prospects...two short weeks after he did precisely the same: "Growth in the current quarter looks only moderately softer than our previous projection, however the risks to our previous projection for 2.5% growth in Q4 are now very clearly to the downside and we are lowering forecasted growth in that quarter to 1.0%. We are also lowering 12Q1 growth to 0.5% from 1.5%. In sum, over the next four quarters we don't see growth that is much faster than the growth that took place in the first half of this year." Translation: "help us Obi Ben Bernanke, you are our only hope."

Full note:

A few weeks ago we made some large downward revisions to our projection for growth in coming quarters, hoping to get in front of the weaker trajectory of the economy. Since then the weakness has gotten back in front of us. Consumer sentiment has tumbled and household wealth has deteriorated. Survey measures of capital spending intentions have moved lower and the housing market shows little sign of lifting. Small businesses, retailers, builders and manufacturers all report a weaker business environment. Global growth has disappointed and foreign growth forecasts have been taken lower. In response we are lowering our projection for growth, particularly in the quarters around the turn of the year.


Growth in the current quarter looks only moderately softer than our previous projection, however the risks to our previous projection for 2.5% growth in Q4 are now very clearly to the downside and we are lowering forecasted growth in that quarter to 1.0%. We are also lowering 12Q1 growth to 0.5% from 1.5%. In sum, over the next four quarters we don't see growth that is much faster than the growth that took place in the first half of this year. Declining energy prices should help to cushion some of the weakness in the economy, and the still-low levels of cyclically-sensitive spending could reduce the chances of getting a negative GDP quarter. Nonetheless, the risks of a recession are clearly elevated. Below is our updated forecast table. We will have a more extended discussion of the growth outlook and our forecast revision in tomorrow's publications.


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choorles's picture

“To some this downturn may seem like a destructive event, the economic crisis is actually a constructive event that paves the way for the future [silver, gold, bitcoin] … The stability of several major European banks has been seriously threatened and government leaders are in constant teleconferences to discuss how to halt the crisis. The US, on its part, has lost its status as AAA and 7 trillion dollars of stock value has gone up in smoke … Yet, a downgrading of the US creditworthiness and the loss of 7 trillion dollars of stock value really does not mean anything except that the numbers associated with certain papers have been depreciated. It is thus essentially correct when commentators say that so far the crisis has not had any effect on the ¨real economy.¨ The recent fall in the markets simply shocked the mental duality between abstract values and real values. There is however no reason to expect that it will be possible to limit the crisis to the ¨unreal economy¨. Thus, I expect that now also the real economy will be hit. How quickly this will actually manifest is hard to tell but I expect that events will lay the foundation for massive unemployment in many major Western countries (It is of course high already, but for many it has still been possible to keep on with the previous lifestyle). I also expect that there will be a large runaway from the stock markets and the stability of currencies will be negatively affected to a point where new radical solutions need to be considered … I think it is realistic that there will be some kind of political reaction to the developing chaos” - Carl Calleman

check out my article with more here

slewie the pi-rat's picture

@ carl:  I think it is realistic that there will be some kind of political reaction to the...

...sunrise?  news cycle?  asswipes like...     ?

deflator's picture

Maybe the munis take a beatdown soon afterall with all the "recovery" assumptions going out the window?

deflator's picture

Buy everything that isn't nailed down when oil goes to $70

Stumpy's picture

Why that level exactly?

SumSUN's picture

When do we get to negative growth?   

deflator's picture

There has been negative growth for six years, it is all top down intervention trying to effect a gradual decline scenario from 2005 on out.

slewie the pi-rat's picture

When do we get to negative growth?  

after it happens and inflation gets factored. 

if this shithead is "right" and we have 0.5% "growth" (annualized) and inflation is, say, .9%, unhhh,...annualized, the we have whatcha call "negative growth" as in the adjusted data for the last, unhhh,...six months, as per the aricle, unhhh,....yesterday, on, unhhh,...zeroHedge. 

any more questions, go fuk yerself, troll.

vast-dom's picture

I think......I am........I am.....therefore........unfortunately in most cases......I think......and worst than that I post shit...........





Taint Boil's picture

Up your nose with a rubber hose - bitchezs .............. wait wrong sit-com. Rum and Coke is kicking in ......... stuck here in Arkansas (can you say Hill … Billy) doing work at a company that heat treats drilling pipe for the likes of Iran .. WTF

PaperBugsBurn's picture

It could be QE3... maybe.


I don't think the US economy will recover from this bankster thrashing though... not in its current incarnation...


mayhem, bitchez

slewie the pi-rat's picture

don't you ever get tired?

it's really pretty peaceful where i live

do you watch a lot of tv?

New_Meat's picture

No, the Philly Fed is just wwwwrron

Bastiat's picture

It's starting to look like S&P smelled the heat coming on their CDO work and decided bite first.  Either that or they broke the deal:  STFU in exchange for no CDO investigation.  But why would they do that?  Their particpation in the CDO fraud reveals they are part of the fraud cabal, were suddenly gripped with a fit conscience?   I'll go with the first guess for now.

Manthong's picture

Does any of this involve the jumping of sharks? 

alexwest's picture


look at last line..
fed budget defciit in 2012 fin year .. less then in
2011 fin eyar by 300 bln $..

so please,, explain me if growth in 2012 fin year less then in 2011 and 2010, but deficit WILL BE least in 3 years..


deflator's picture

exactly, deficits soar by orders of magnitude for debtor nations in a deflationary environment. What scenario could possibly account for lower growth and lower deficits?

sellstop's picture

I think it would be a mistake to anticipate another QE too soon. It will not happen for a couple years. You can say what you want about the Fed being a tool of POTUS, but it ain't gonna happen. The Fed won't go broke. Even they can find enlightenment after enough pain. And we may just do better that the rest of the world. At least the western world. This time.....

There is a huge opportunity here. If we as a country seize it. Get our house in order. Move toward a balanced fiscal situation, move toward energy independence. We are the first to go through the demographic situation, and we have the opportunity to come out the other side ahead of the rest of the western world.

Long term, yes. But we may do it. That is what all this angst is about.

But, in the meantime, it is the mean time.


dwdollar's picture

"There is a huge opportunity here. If we as a country seize it. Get our house in order. Move toward a balanced fiscal situation, move toward energy independence."

This or something similar is mentioned +10 times a day here on zerohedge. I'm telling you guys, it isn't going to happen. We are too far gone to have any real political change. When +50% of the population is dependent on the government how do you think they will vote? Anything that interferes with their milk and honey will be shot down. It will continue until the host can no longer supply that milk and honey and that's when things get Mad Max kind of ugly.

StychoKiller's picture

When you're up to yer ass in alligators, it's hard to remember that your original objective was to drain the swamp!

Ain't but one way out for the Fed, PRINT!

"The Creature From Jekyll Island, a Second Look at the Federal System", 5th Ed., G. Edward Griffin, ISBN:  978-0-912986-45-6

Hedgetard55's picture

Has shit gotten real enough yet for you, bitchez?

zorba THE GREEK's picture

The SEC says they are now going to investigate S&P for their role in MBS scandal. 

How obvious is that. The SEC needs to be investigated by the Justice Department

for their role in the Madoff scandal. And the Justice Department needs to be investigated

by Congress for their role in Fast & Furious Gun running. And Congress needs to be investigated

by somebody for taking bribes from every lobbyist in the universe. But let's get back to investigating

the S&P for MBS's while Anthony Mazzilla the Italian gorilla from Countrywide walks around scott

free.  No wonder people hate the Government. Maybe after the collapse and most people lose most

of what they have, they will stand up and fight back. WAKE UP AND LIVE, AMERICA!!!!

JR's picture

That constant lowering yet never going with GDP below zero fits Alice and the Queen - in Wonderland - where Alice runs in one place faster and faster and never gets anywhere:

“Well, in our country,” said Alice, still panting a little, “you generally get to somewhere else – if you ran very fast for a long time, as we’ve been doing.”

“A slow kind of country!” said the Queen.  “Now, here, you see, it takes all the running you can do, to keep it in the same place. If you want to get somewhere else you must run at least twice as fast as that!”

bmwm395's picture





bottom line is simple. es makes a bottom in late

sept. or Oct. then runs up till election time.

Mercury's picture

the scramble for who can downgrade the US in the most unique, bizarre and sadomasochistic fashion is on -

Moody’s (not to be outdone) – “Hey USA!.....the back of yo’Mama’s neck look like a pack of hot dogs!"

Muddy Waters – Sets a 20 page, point-by-point, scathing downgrade to the tune of Black Sabbath’s War Pigs

Goldman Sachs“We recommend that equity, debt and currency investors back up the truck to Uncle Sam’s Club because it’s the bargain of a lifetime!”

Caviar Emptor's picture

We aren't going to have a 'recession'. We're going to have the next leg down in a depression. There was only a fictitious recovery on paper based on monetary dilution giving the appearance of growth. Since we never had a cyclical recovery, we can't have a cyclical downturn. We're proceeding downward. 

It's important to realize this. Because the "treatment" differs. UNfortunately out of a combination of pride, stubbornness and stupidity our leaders chose to convince you the public and themselves that this is just another garden variety recession (even if it is a double-dip). Until we face up we won't be able to get on the right path. 

Arkadaba's picture

Agree. It always was a depression. Not a recession with recovery or double dip. 

adr's picture

What i wonder is if we are getting another round of lowering expectations and cutting forecasts so much that TPTB are setting the market up for epic beats based on the markdown to zero.

The market doesn't seem to care if forecasts are lowered a week before earnings and corporation A would have laid a giant turd had it not been for the lowered expectation.

Remember the entire BS 2009 rally was based on, "Well the data is terrible but it isn't as terrible as we expected." We then got a doubling of the market faster than we could blink. A GDP number of 1% on a lowered forecast of .5% coupled with a bit of QE could be a big enough point for the algobots and manipulators to send the market sky high.

As long as the market ges up it allows the global ponzi to steam ahead. Only the lack of capital flow can derail this bullet train to fiscal hell.

Jovil's picture

Living through a currency devaluation and how to cope

In 1976 I was managing an American subsidiary of a successful large US Company in Mexico. It had been a financial turnaround for our team. Cash flow had accumulated in our bank in Mexico and corporate didn’t want the money repatriated to the US. Although we had already paid a 35% income tax to the Mexican government, we would have to pay an additional 30% exit tax to repatriate the money. In addition, we would have to pay high fees for the peso/dollar exchange, in order to make the transfer. The company wanted to expand our successful business and so we decided to keep the money in Mexican pesos to be used for further expansion.

One morning, as my wife and I were on a trip driving on the highway, we heard a national message from the President of Mexico, Luis Echevarria, one of the most corrupt presidents in Mexican history. “It is a lie that we are going to devalue the peso,” he said.

Read more

Problem Is's picture

AAAYYYYYYEEEE!!! Wrongamundo...
Zero Hedge referencing the Fonz... That is just one small step away from jumping the shark...

AcidRastaHead's picture

I know he jumped the shark and all, but I miss the Fonz.

Jumbotron's picture

Since you can subtract 2.5% for government spending from the 0.5% forecast your are looking at a -3.0 % real , organic, private sector GDP.

Instant Recession

Instant Karma

Instant Bitchezz

Of course we have never really left the recession, only stopping the collapse with even more debt and money printing.

Now as austerity comes in the form of decreased federal and municipal spending either due to default of munis or tea-publicans wresting the reigns of power away from the social-crats then the recession-depression will be openly talked about and recognized as that -3.0% figure becomes reality.

However, I wonder if the Republican president and congress and their lapdogs in the talk-o-sphere will say they just inherited a mess from Obama who said he inherited this mess from Bush who said he inherited his mess from Clinton who said he inherited his mess from Reagan/Bush who said they inherited their mess from Carter ad infinitum, ad nauseum?

Meet the new boss....same as the old boss.....meets reality.  Which can't play with a time machine built on slavery (which is what debt is....bringing future demand forward to the present while enslaving the person who gets the future now to a banker) and not have dire consequences when the future turns dark and the slaves can no longer pay.