Previewing Today's Q1 GDP Print

Tyler Durden's picture


In 45 minutes we will get the first unrevised big picture look of how the US economy did in the record hot weather-boosted first quarter of 2012. Consensus is looking for a +2.5% print, although according to some preliminary analysis, the weather, which simply pulled "demand" forward, may have resulted in an up to 30-40% increase in the baseline print. Whether or not that is the case depends on the flow through Q2 data, which so far has been quite horrible as we showed yesterday, but far more importantly, on how much debt the Treasury issues, as when one cuts out the noise, the only thing that does matter for "growth" is what the net re-leveraging in the system is. Everything else is mostly weekly BLS BS that only serves to increase the general level of Schrodingerian confusion. Anyway, for those who enjoy observing the trees and ignoring the forest, here is a preview of what to expect today, first from Bloomberg and then from Goldman.

First, courtesy of Bloomberg Brief and its chief economist Joseph Brusuelas:

Economists are forecasting growth of 2.5 percent, according to a Bloomberg survey, in line with the u.S. long-term trend. The primary driver of this growth is likely to be an increase in consumer spending and strong retail sales boosted by pent- up demand for durable goods. Personal consumption expenditures are likely to expand at a 2.3 percent rate, which should translate to a contribution of roughly 1.7 percentage points to growth. This should result in a real final sales number of 2.1 percent, up from the 1.1 percent posted during the final three months of 2011.


The quality of this growth stands in stark contrast to the $52 billion in inventory building that accounted for roughly two-thirds of growth during the fourth quarter of 2011.


Somewhat surprisingly given the slowing of overall government spending, an increase in defense expenditures by the federal government will probably swing the contribution of government spending to a source of growth from a net drag.


Rounding out the sources of growth is an- other solid increase in outlays on equipment and software and a pick-up in the pace of residential investment.


While the net drag from the trade deficit will likely decline to 0.1 percent from 0.7 percent last quarter, the portion of the deficit associated with petroleum imports appeared to decline even with a sharp increase in prices and a growing economy. This suggests that net exports will be the major swing factor in the first estimate of first quarter growth by the Bureau of economic Analysis. Prior to the April 12 publication of the February trade deficit, growth was tracking near 1.7 percent.


In any case, the likely slowdown in demand for domestically produced goods given the slower pace of global growth in general, and from Europe in particular, will likely lead the BeA to revise its estimate of a narrowing in the trade deficit.


The unexpected surge in inventory building by firms in February may cause the quality of growth to be less than what economists expect in the quarter, which may cast a pall over what would otherwise be a solid quarter.


Forward-looking investors may not take much solace from better quality of growth. Based on recent data reports, the economy lost momentum in March due to payback from weather, and early April data has generally failed to meet expectations.

And now from Goldman:

Worse headline, better composition. We estimate that Q1 GDP growth increased by 2.7% (annualized) in Q1, down from 3.0% in Q4 (we revised up our estimate by one tenth after Wednesday's durable goods report). Despite the slight deceleration in overall GDP growth from Q4, the composition looks set to be meaningfully stronger. Specifically, Q4 growth was boosted by a 1.8 percentage point (pp) contribution from inventories. Domestic final sales--GDP less inventories and net trade--increased by just 1.3% in Q4. In contrast, we estimate that inventories added only 0.2pp to growth in Q1, and expect an increase in domestic final sales of about 2.5%. Most of this increase reflects firm consumer spending, with some help from residential investment and business investment on equipment and software. We look for government spending and business investment on structures to subtract from growth.

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Fri, 04/27/2012 - 07:59 | 2379612 transaccountin
transaccountin's picture

1400 print on the /es... man that is just unreal

Fri, 04/27/2012 - 08:08 | 2379629 French Frog
French Frog's picture

More to come, I fear...

Fri, 04/27/2012 - 08:11 | 2379630 HyperLazy
HyperLazy's picture

LOL, do the algo masters really think Joe-401k is gonna buy into the market at this point? Maybe some I suppose, but a lot of folks I chat with will not jump in. How you like that bankers? You killed the golden goose.


Fri, 04/27/2012 - 08:28 | 2379655 SheepDog-One
SheepDog-One's picture

Yep they really screwed themselves now. What they should have done is 'give and take'....but no, cant have that. Theyre central banksters they want all the gold eggs now! Now they have no return becaus retail is long gone.

So now theyre left with no option but to keep pumping it, only ensuring far worse innevitable collapse. No tree grows straight up to the sky in one spring.

Fri, 04/27/2012 - 08:30 | 2379661 maxmad
maxmad's picture

GDP about to print 1.8% major miss!

Fri, 04/27/2012 - 08:31 | 2379664 maxmad
maxmad's picture


Fri, 04/27/2012 - 08:38 | 2379681 SheepDog-One
SheepDog-One's picture

So they went with Goldilocks number? Oh the crackheads promised free bags of crack wont like that much.

Fri, 04/27/2012 - 08:03 | 2379616 sockratte
sockratte's picture

thumbs up for gdp, i guess

Fri, 04/27/2012 - 08:07 | 2379626 TwoJacks
TwoJacks's picture

i'm betting on a miss to the downside on whatever consensus is. and this point does it really matter what any government stat says?

Fri, 04/27/2012 - 08:13 | 2379633 Temporalist
Temporalist's picture

Bart Chilton said MF Global probably won't happen again...I'm sure everyone is reassured.

Fri, 04/27/2012 - 08:18 | 2379642 sabra1
Fri, 04/27/2012 - 08:29 | 2379659 SheepDog-One
SheepDog-One's picture

People only concerened with an S&P number, while all their rights are stripped away. 

Fri, 04/27/2012 - 09:00 | 2379678 HyperLazy
HyperLazy's picture

Posted this before, don't make me post it again. Oops too late.

Anyhow, on July 12th, ISPs and the big media distributors will start tagging people who download stuff via torrent. May as well grab these goodies while you can.

American Dream Film - half hour cartoon about the FED, good for showing normals what is going on:

Inside Job - movie that will help normals understand what happened financially a couple years ago:

Margin Call - dramatic movie representing a financial threat, from the bankster perspective:

Chekist - movie about the socio-political purge in the beginning of communism in Russia:
I can't help but wonder if America will get its own version of the Cheka...


Fri, 04/27/2012 - 08:39 | 2379687 SheepDog-One
SheepDog-One's picture

Of course 'MF Global wont happen again'...theyre gone now so it will be someone else stealing all the money.

Fri, 04/27/2012 - 08:13 | 2379635 trebuchet
trebuchet's picture

gdp up demand up real demand for....... gold up 

gdp faltering oops too much monetary stimulus prices up  inflation   .......  gold up

gdp down damn more fiat ponzi musical chairs risk off/safe haven plus ultimate inflation implications .... gold up


am i forgetting something?

Fri, 04/27/2012 - 08:13 | 2379636 LongSoupLine
LongSoupLine's picture

Here's your reality check:

The only thing that matters today is the "headline print" for algos to ramp April closure to a green finish.

Fri, 04/27/2012 - 08:15 | 2379638 crawl
crawl's picture

Doesn't matter what the number actually is, but that it is better than expected. Bad number will be spun to a perfect polish.

ES up 10 points since 3AM. Rocket is lit for take off. Crazy manipulation day ahead.

Fri, 04/27/2012 - 08:19 | 2379643 Oldwood
Oldwood's picture

Not when it is the only game in town. And afterall, its better to be a muppet than a sucker who would actually consider working for it! Place your bets!!

Fri, 04/27/2012 - 08:24 | 2379648 Monedas
Monedas's picture

Better than expected....not as bad as some predicted....good is revised more good....bad is revised less bad !  I knew better liars in kindergarten !   Monedas   1929    Comedy Jihad Sandbox Memoirs Excerpt "The Sand Papers"

Fri, 04/27/2012 - 08:33 | 2379672 SheepDog-One
SheepDog-One's picture

Yeah they want the free money, jonezing for it bad like a crackhead in a dry spell, but if they get it they know it will screw them big time by fall. Oh well FED do what you want I'm just sitting back watching you squirm, youre not doing anthing to me.

Fri, 04/27/2012 - 08:27 | 2379652 Dapper Dan
Dapper Dan's picture

Wow Ford blew them away!.........oh wait, no........I have my chart upside down, sorry!



Fri, 04/27/2012 - 08:27 | 2379653 the not so migh...
the not so mighty maximiza's picture

they have to get Obama reelected so GDP will be hugh beat, but then no QEIII, market plummets

Fri, 04/27/2012 - 08:31 | 2379663 SheepDog-One
SheepDog-One's picture

Managing this market must kinda be like being a crackhead. More more more I dont give a shit if it kills me gotta have more though, and right now!

Fri, 04/27/2012 - 08:33 | 2379669 the not so migh...
the not so mighty maximiza's picture

let me shake my 8 ball and find out.

Fri, 04/27/2012 - 08:32 | 2379668 kridkrid
kridkrid's picture

Obama may be reelected, but I think the assumption that many here have that "they need to get Obama reelected" is false.  Both parties and each candidate is absolutely captured, IMO.  The "they" that you refer to can leverage either result.  Same as it ever was. 

Fri, 04/27/2012 - 08:36 | 2379676 SheepDog-One
SheepDog-One's picture

Definitely, to the FED it doesnt matter Obama/Romney all the same to them. The only difference may be strategic do they want hated white repub as the fall guy? The media would be free to rip Romney a new asshole....I think that is likely, they want Romney scapegoat now.

Fri, 04/27/2012 - 09:50 | 2379984 kridkrid
kridkrid's picture

Yeah... we definitely think alike on this topic.  There is utility for "them" in whomever gets elected.  "The hated fall guy" - I'm fine with, the "hard-fisted, nationalistic problem solver" who follows the fall guy is the one who scares me.  That guy is being groomed somewhere.  There may even still be time to elect him this time around.

Fri, 04/27/2012 - 08:31 | 2379666 TwoJacks
TwoJacks's picture


Fri, 04/27/2012 - 08:32 | 2379667 Central Bankster
Central Bankster's picture

so it missed, thats bullish right?

Fri, 04/27/2012 - 08:34 | 2379674 ChrisDG74
ChrisDG74's picture

Double Deuce(of Colt-45), bitchez!


Fri, 04/27/2012 - 08:38 | 2379680 fonzannoon
fonzannoon's picture

Guys guys guys...Ben said he is not going to do QE this week. Calm down. Next week will be here soon.

Fri, 04/27/2012 - 08:38 | 2379683 youngman
youngman's picture

2.2%......thats good for a 100 point higher market...the new world order.....failure is great....

Fri, 04/27/2012 - 08:40 | 2379690 Central Bankster
Central Bankster's picture

Honestly, would a negative print have caused a selloff?  One would assume at this point, that ANY number could be spun as a positive.  IE -1% GDP, market up a 100 points on speculation of new QE etc. 

Fri, 04/27/2012 - 08:41 | 2379692 HyperLazy
HyperLazy's picture

Under social marxism, everyone is a winner (loser).

Fri, 04/27/2012 - 08:41 | 2379689 SheepDog-One
SheepDog-One's picture

'We see 2.5%, due to pent up demand for durable goods'....nevermind durable goods shit the bed.

Fri, 04/27/2012 - 08:43 | 2379695 Temporalist
Temporalist's picture

Oh and Bernanke's ass clown puppet Joe Weaselthal is on with Chilton...what a treat.  I didn't expect to be fed so much bullshit I'll get my bib.

Fri, 04/27/2012 - 08:43 | 2379696 kridkrid
kridkrid's picture

I think I'll take it upon myself, whenever there is a tread about GDP, to remind everyone of just how retarded of a measure it actually is.  And before anyone goes all PC on my use of "retarded"... this is actually the correct use of the word. 

GDP says absolutely nothing about our condition as a people or our economy.  Instead, growth in GDP correlates better to the growth of the money supply which correlates to the growth of debt, all of which is emblematic of the Ponzi scheme that is our monetary system.

GDP is a distraction... fodder with which our two false parties will claim success or point out failure, simultaneously.  It's retarded.

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