Q4 GDP Misses Estimates, Inventory Stockpiling Accounts For 1.9% Of 2.8% Q4 US Economic Growth
The US economy grew at a 2.8% annualized pace in the supposedly blistering fourth quarter, yet the number was a disappointment not only in that it missed estimates of 3.0% (and far higher whisper numbers) but when one looks at the components, where a whopping 1.94% of the upside was attributable to a rise in inventories as restocking took place. And as everyone knows in this day and age a spike in inventories only leads to sub-cost dumping a few months later. In other words, the economy grew at a 0.8% pace ex inventories. Yet for all intents and purposes, this is considered "growth." Personal consumption was also weaker than expected coming in at 2.0% on estimates of 2.4%. Perhaps the only silver lining was Core PCE which came at 1.1% on expectations of 0.9%, however as discussed extensively before, this was driven by an unsustainable surge in credit-binge spending, primarily for iStore trinkets, and is hardly sustainable especially as the US Savings Rate fell to 3.7% in the fourth quarter, the lowest since Q4 2007. In other words Joe Sixpack is living large, especially since Joe Sixpack no longer has to pay his mortgage. Unfortunately this is a collision course with every economic principle and the next taxpayer funded bank bailout is only a matter of time. Bottom line: the artificial economic pick up is over and Q1 will see inventories actually detract from GDP: as a reminder Q1 2011 GDP subtracted 1.8% points from the final 0.4% GDP, and that was following only a 0.9% inventory rise in the preceding quarter, Q4 2010. And that is not even mentioning the tight fiscal situation no longer being a benefit to growth. Oh yes, and gas is no longer falling. And not to even mention that the GDP deflator mysteriously imploded from 2.6% to 0.4%: that's odd - not even edible ipads seem to be coming down in price. Which means that using a reslitic deflator would have resulted in virtually no GDP growth. To paraphrase Lester Burnham, "It's all downhill from here."
Finally a chart of the GDP Price Index. It just printed the third lowest since 1963.
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stick the inventory on the ships, put them out to sea and count them as sold. easy button
that button is getting sticky from overuse...
-R
The growth doesn't even match inflation @ 2.96%
This is going to get ugly.
Nah... like reality matters.
This isn't just bullish, it SUPER BULLISH!!!!
The breaking news from CNN said something like US economy grew at nearly 3% which economists say is a level where firms start hiring again.
So I guess CNN agrees.
Or maybe CNN/Obama's Prosperity Mouthpeice only scanned the wiki article on Okun's Rule, saw "3%" written somewhere in there, and couldn't comprehend the rest due to the mathiness...
CNBC on its website actually has a headline with the words "GDP", "grows" and "clip" all in one line. A cursory review would suggest good news. Gotta love big brother.
FoxBusiness has on the front page: "The jump [of 2.8%] was the biggest since the second quarter of 2010"
'Please! Rush to buy all these bubble equities!'
Thanks, your Overlords.
That was the exact soundbite on NPR this morning as well. It said, "a slight miss on expectations of 3%, but a huge improvement over this time last year and the biggest since the second quarter of 2010".
WSJ online: "U.S Economy Gathers Pace: The U.S. economy grew at its fastest pace in more than a year and a half in the final three months of 2011, rising at an annual rate of 2.8%"
"The growth doesn't even match inflation @ 2.96%"
...................................
Nor does it match the 2.5% GDP growth required to meet employment requirements.
More job cuts coming = more bad news for housing = more bad news for tax collections at all levels = oh hell... one big fucking mess.
PRINT BEN, PRINT!!! Nominal dollars to zero purchasing power... Got PMs?
Got PMs? :-D
~~"The growth doesn't even match inflation @ 2.96%"
Worse, our 3% inflation number doesn't count luxury items. What are these luxury items? Oh, only really unnecessary items like food and fuel. The depth and breadth of current establishment deception never ceases to amaze me.
But, I'm crazy for stocking some extra food and having a firearm to protect it...
But, I'm crazy for stocking some extra food and having a firearm to protect it...
No, not crazy, but according to the .gov, you are a terrorist.
http://www.bloomberg.com/news/2012-01-25/container-ships-at-clipper-spee...
http://www.efinancialnews.com/story/2012-01-25/chart-of-day-baltic-dry-s...
BDI fell off a cliff.
2008 low (666) will probably be taken out next week. Nice.
"Instead, he said he was surprised by how long the Baltic Dry took to fall. The NewContex index – an indicator of prices for transporting products in container ships – started falling in April last year.
Bullman said: “When we saw that happening in April, we realised that risks had returned to pre-2008 levels. We thought the Baltic Dry would start falling too, but it was actually relatively resilient.”
“What this is signalling is that the world economy is slowing down much more quickly than people have been thinking.”
Wow - and how is this good for the economy again?
Actually, I think that's their plan for poor people...
That, and Soylent Green. Only it will be called Soylent Mac with Cheese.
No problem here! I already have a good campsite picked out and my blue tarp for a tent. I will simply camp out behind the Safeway store so I have first dibs on all the yummy delicious food they throw away!
I love it when a plan comes together.
It's going to be gettng crowded back there.
You mean Soylent Mac with bacon and cheese?
Why pick up the selling expense?
Insure em, route them around the Italian coast, buzz the tower, and presto, money money money.
Short insurance.
"stick the inventory on the ships, put them out to sea and count them as sold."
Great idea! Will help boost the BDI as well, which has fallen off a cliff over the past 2 months.
No need to bother with automobile inventory because it's already counted as sold once it reaches the dealers.
Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: "There are three kinds of lies: lies, damned lies and statistics."
- Mark Twain'
Bernanke's "Oh Shit" moment..
Or maybe he was aware of it the other day when he said he would keep ZIRP for an extra year...
But, yes, you're right.
DavidC
Precisely. Interesting how GDP was booming during that inflationary period back in the 70's < snark >
There is a very real cost for creating capital without added any real value, Same as it ever was.
Glad to note your comment re creating capital without adding any real value... I believe this is a contributing factor to the EZ's debt issues which is only catching up with them now... apparently Spain and Greece (and probably the rest of EZ) did not adjust for PPP before changing into the Eur€ - they just changed the signs and banked the overnight increase in sales profits. However in the intervening years, they have not invested and now have this additional pressure upon them.
Presently, I'm "stockpiling" ammo... My personal GDP is therefore booming...
David C you are spot on. Anyone who thinks Bernak did not know this number was not coming is insane. Anyone who was surprised by his "bleak economic assessment in the face of improving data" needs mental help. He knew. Now everyone will say how smart he is for his outlook and give it more credibility. It would be funny if it did not make you nuts.
Makes you wonder what the real GDP will be after the revisions. Funny how GDP is always revised downward, after the fact, while the initial claims data is always adjusted upwards, after the fact. But surely there is no manipulation going on.
The problem with that is the massive inflation that we have only gotten a small taste of.
Ask your wife how much have the staple items in the grociery store risen in the past 2 years. Have they risen by the 2x3% that we have been told the have? Hell, no. Some item are up 30%, 50%, or even 100% like gasoline. The ZIRP effect is not a linear function. Continued input into the system has a lagging but multiplicative effect. Prices are about to "necessarily skyrocket", we had all better be preparing for a BIG storm ahead.
Yes, it does appear the flux strength of the feces that is colliding with the occillating air turbulence inducer is indeed rising in intensity, doesn't it?
Gas was 3.15 yesterday morning when I pulled into work. When I went to lunch it was 3.49.
Nice .45 cent overnite swing in gas prices here too....this is all fucked.
How does someone down-vote that post? Weird.
I think Sheep dog has a stalker that just votes down any post.
A badge of honor. I want one of those.
Ask and you shall receive!
I would like to win some state sponsored lotter (i.e. tax on dumb people who don't understand math), take the lump sum payout and convert it into farmland.
they'd just raise the taxes on your farm until you couldn't pay it anymore... Then confiscate the farm...
You're back to square one...
Ha! thanks for your support.
Can't afford to have pesky negative facts getting in the way of regular hopium high...
Because the math is wrong?
They raise prices for absolute necessities and devalue the dollar to reduce purchasing power.
Double whammy.
Food and fuel are not components of the Core Inflation Index so they pump up these prices and have the cheek to announce there is no inflation.
WHAT THE FORK?
One needs to look no further than your statement to understand just how absurd our reality is. Food and fuel are not components of the Core Inflation Index. Of course it's explained away in very rational sounding explanations... I like the word rationalize... rational sounding LIES.
This is just the start... and we are still a long ways to go before people take to the streets. The % of our incomes that go towards food is still relatively low... that will change. And it doesn't really matter if they choose deflationary collapse or a hyper-inflationary "collapse"... The cost of our food as a % of our income is going to climb.
You are right. When food becomes 80% of their income 70 to 80% of their income, then things will get ugly.
It's not even that high. Everyone wants to come up with reasons for the Arab Spring, and to be sure, I'm one who likes to entertain good conspiracy theories. And while I'm sure their are masters pulling strings somewhere in the mix, the rise in food prices relative to incomes is what really drove discontent. Get ready... because it's coming.
Won't they just add more people to SNAP?
only those that vote the right way
Story out this morning that the average price for prime farm land in Illinois went from $8,000/acre in 2010 to $10,500/acre in 2011 (31%+ increase), with some individual transactions pushing $12,000/acre. I can count back on one hand the number of years where the average price per acre was half of what it is today. It's my understanding this is not unique to Illinois, and that similar increases have occurred for prime farm land throughout the Midwest.
Also heard an interesting story on NPR last week, I believe on Market Place (and yes, I listen to NPR, but no, I'm not a commie) about the projected explosive growth in world population in the coming decades coming almost exclusively from the poorest regions of the globe, and how there won't be enough staples (mainly rice) to feed them all.
Food inflation leading to food insecurity will continue to be the match that lights the fuse of unrest...scary stuff IMO.
Land in the Utica shale area of OH could be had for about $1K in 2007. Now is going for at least $2,500/ac.
There is plenty of fertilizer buffer in the U.S. if we just get out of the golf course lawn mentality.
Every household with any yard should attempt to grow at least two bushels of food per year. It's fun, eliminates 100% of transportation cost, saves money, and tabilizes total U.S. food production a little more.
If we are at peak oil, we are at peak affortable fertilizer.
Sadly, for much of the world, food may become even more unaffordable.
70-80%? Hell, make it 40%. Many experts like Keiser and economists like Rogoff have always stated that 40% of income for food is a big barometer for revolutions.
Granted, it was 70% in 1790's France, but Americans aren't as patient. Least I don't think they are.
BTW, gotta love the constant lying from government. Under Bush, it was just him and Paulson deflecting at the podium. Under Obmama, they just hope that thanks to the shitty education system, they are banking that people can't just do simple math.
Maybe if I got a raise on my wage to meet the money supply rather than the BS CPI number.
Hell, I don't even get a raise of 5%! Or a bonus. Maybe i can go get a new job......oh wait, 4-to-1 ratio for job applicants, and an average 41 week wait.These are the type of numbers that develop healthy drinking problems.
Gold prices to average $1450, silver $26 in 2012: Natixis
http://www.commodityonline.com/news/gold-prices-to-average-$1450-silver-$26-in-2012-natixis-45548-3-1.html
I had a good chuckle at this forecast.
Paper gold and silver or real gold and silver
Who cares anymore. The paper trade is as crooked as the FIAT trades now.
Anyone wants to do business internationally now needs to use both paper and physical. Of course the physical gold will be more painful to separate with versus the paper.
They need new forecasters.
They will probably right. The deflationary fight is not over yet. Not by a longshot.
Theyre not really 'battling' anything here at all I dont think, just marching in place keeping the music going till they pull the rug out.
That's right. That's all the number says, right? The forecast assume a deflationary spiral which absent QE infinity is what you would eventually get, no? Though my money is on QE infinity.
QE infinity is correct and it means they will destroy what is left of the fiat dollar given time.
At what price point will fuel prices bring the world economy to a complete standstill?
...and, I am taking into account the stairstep movement of fuel prices; ie, higher price causes demand to drop = drop causes increase in useage = higher useage caused demand to drop...etc. But, the stairs are going up in a long term trend. At some point fuel priced in fiat will bring economies to a standstill.
Then the mid east action will get really interesting.
i hope they are right, i still need to buy quite a bit of physical
Chuckle or not, it's possible we will touch those prices, but we won't average them for the year. Not possible.
The current prices of gold and silver are heavily manipulated, and the system depends upon this manipulation, so a dramatic climb in prices would utterly destroy the system. If that happens, gold and silver will ramp to the moon. (thereby destroying any low yearly average from a spike down)
If one believes the old system won't make it through the year, there's only three alternatives that I see: collapse; hyperinflation; or TPTB step in and devalue buy tying their fiat to the SDR and tying the SDR to gold, then ramping gold to the sky by not only halting their price suppression but also by engaging in gold purchases, and then they print like crazy (This is the FDR alternative identified by Bernanke in his 11/21/2002 speech). I think we may see a bit of all three, but I can't see us getting out of 2012 without at least one of these things happening.
So the question of what gold prices we see depends upon which of these three things happens. Collapse would yield an instant ramp in gold and silver to unimaginable levels. But hyperinflation or a devaluation would eventually lead to the same result.
Therefore, the only way I see us even momentarily touching such low gold and silver prices is if TPTB use up their remaining margin hikes and MAKE prices drop that far. Of course, this would decouple the paper price suppression game and bring about the end of the system as we know it, so that's why they haven't done so already. However, if they know the system is about to collapse anyway, or hyperinflation is about to kick into high gear, or a devaluation is coming, then the old system is about to die anyway and there's nothing to stay their hands from dropping prices and shaking out the weak hands so they can pick up cheap shares and physical.
You must prepare mentally for this event. TPTB ALWAYS create panic at the end of the trend so they can pick up bargains. Collapse may or may not come without warning, but hyperinflation or a devaluation cannot come without news of it reaching those who manipulate markets.
The fourth possibility, that we stumble through 2012 as we did through 2011 doesn't seem very likely to me with all of the indicators that this thing is coming to a head. However, if I am wrong, (I'm not) we can expect another 20% rise in prices, not a year long correction. Notice that the last correction broke the trend of the last three in NOT being of ever increasing duration and intensity? We are printing at increasing rates, global derivatives are increasing at more than 30% year over year, and our major trading partners are dumping treasuries and cutting out the dollar as a reserve currency. 2012 is going to be the year.
How do you get paid to do that quality of forecasting? There was zero analysis, no reference to QE or counterparty risk on sovereign debt instruments. No reference to why CB's might not buy in 2012. No reference to why a slowdown in asian purchases might occur. It is pure, unadulterated crap.
Might as well as said 1000$ gold and 10$ silver.
The GDP Deflator has been cut to 0.4%, the cheating SOBs!! Real Inflation is running at over 10%. So real GDP is down 7%.
Real inflation at 10% plus real unemployment at 11% puts the Misery Index at 21%.
The Misery Index averaged 16.26% under Carter, the worst until now, since Truman.
Looks like the market is setting up to head lower. The setup from yesterday is still valid. Now it looks like a head and shoulders technical pattern forming.
http://www.youtube.com/watch?v=ukgoNRBgMbg
Typical 4th quarter BS. If history is a guide the next couple quarters will come in lower, gosh, what will the PTB's do then?!
Plus this continues:
Rans:'Baltic Dry index falls 3.6% to 726 point'
Relentless. We'll take out the lows by next week if this continues...They will need to change the way they measure the data to ensure it's accuracy pretty soon. Shipping, food, energy, air and gravity are too volatile to try to measure in short periods of time. Obviously.
China is having their new year holidays. The biggest consumer of commodities account for a large part of baltic dry index where the decline is partly attributed to being seasonal. China ports are closed durign this period so there wont be much cargo in sea transit prior to this event.
Excessive vessel supply is another contributor where DEAD WEIGHT TONNES of vessels enter the market this year.
Too many vessels and too little cargo to carry. The europeans who financed these vessels are in for a big time screwing. Vessels tend to depreciate at 10% or so per year. Shipping lines and freight forwarders are having a tough time making money amid low volume and high operating costs. 3rd party ship owners (who are usually excessively leveraged) who dont operate the vessels will have a good time finding charterers.
Yeiii America
Well, at least it's all downhill from here. I mean, it's easier to go down a hill than up, so that must be good news, right?
When the stockpiling ramps down as it must do then watch out below.
many , many people will be let go
but wait bad news is good news right? Ben Bernanke is doing the "pianist palm warmup"before he hits that Ctrl+P ans performs the sweet symphony
Why is gold falling and dollar getting stronger on this dismal data?!?
Fortification. Everyone going to cash positions. Hell, even I don't pay the gardener with gold or silver bars.
BB said rates will stay at zero for however long, they've been at zero for however long already with not much effect. He didn't announce QE3.1 so should we assume wall street will force pain upon the masses until BB prints again ? If so then gold is about to test mid 1200ish and SPoo gonna drop like a turd too.. no ?
That is what I was thinking, short term. I know quite a few mid-grade and large-grade (100 million or more in assets) investors going to cash. Everyone hoping to "buy the dip". The wild-cards are the bond auctions and debt that must be rolled over in the western world. If history is any guide, the more people tight fist their money, the harder the kleptocrats will push their government trolls to come after it. Soon it will be illegal to have a savings account, PMs, or sell any stocks or financial products of any kind.
The entire monetary system is a fucking fraud, everyone knows it, but no-one wants to let it die. Interesting times indeed.
Because Bernanke has failed to prevent deflation. This is deflationary data.
Gold is not a deflation hedge.
Rubbish. Maybe gold is not a deflation hedge, but the printing press sure is. The printer magically defeats deflation at the low cost of destroying the life savings of anyone ignorant enough to trust the government. Ben and company have spent a lifetime writing about this, bet their professional careers on this concept, and have been carrying it out for four years, bankrupting all the nations of the West in the process. They will print the dollar into oblivion if they have to, and now they are cornered and have to.
Have you not noticed gold climing over the last ten years? Haven't you not noticed we are in deflation and gold keeps climbing in price?
Your adherence to theory over reality is what blinds you. They have a printer and they will continue to use it. Sure, the deflationist position that defaulting debt makes the dollar stronger is true, but that's not the only force in the universe, it doesn't erase the trillions being printed to muddle along. Once the debt to GDP becomes too great, collapse is inevitable. There's nothing magic about deflation. If all else fails, TPTB will just devalue.
Gold has never been a deflationary hedge idiot. Gold is simply a life preserver in a sea of fiat. Gold is honest money and has always been part of any truly diversivied portfolio. gold's "price" in fiat will vary with the purchasing power of the fiat, period. But at the end of the day, gold always has purchasing power and always buy more paper in the long run.
Options expiration.
For the same reason it happened after the debt ceiling issue. When stupid people get scared they run toward the burning house.
I took my son to Walmart a couple days ago, there was a toy he wanted to get. Half of the toy shelves were empty. It was the strangest thing, I've never seen it like that before. I wonder how long before the food shelves are like that?
right after the price controls are put in place. So long as the foods prices can go up, the shelves will have food. When the farmers and food processors can not get the prices they want, then you can sweat.
Personaly I'm not gonna sweat it, other than the social unrest that is coming, I keep a well stocked pantry.