Just as consensus had expected, after printing at -0.7% in the first revision to Q1 GDP, the final revised GDP print for the March 31-ended quarter came in at -0.2%, confirming the third negative GDP quarter in one recovery cycle since 2011 (all of which have come in the first quarter of the year as global winter cooling fans will have you know)- the first time this has happened since the 1950s.
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The breakdown by components:
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According to the BEA, which has yet to implement double seasonally adjusted data so that every report is favorable no matter how bad it is, 'the decrease in real GDP in the first quarter primarily reflected negative contributions from
exports, nonresidential fixed investment, and state and local government spending that were partly offset
by positive contributions from PCE, private inventory investment, and residential fixed investment.
Imports, which are a subtraction in the calculation of GDP, increased."
More details:
Real GDP decreased 0.2 percent in the first quarter of 2015, in contrast to an increase of 2.2
percent in the fourth quarter of 2014. The downturn in the percent change in real GDP reflected a
deceleration in PCE and downturns in exports, in nonresidential fixed investment, and in state and local
government spending that were partly offset by upturns in private inventory investment and in federal
government spending and a deceleration in imports
The comparison with the last month's revision shows a modest increase in PCE from 1.23% to 1.43% on a SAAR basis, a smaller deduction from CapEx, which was revised from -0.21% to -0.05%, and a small pick up in inventory even as net trade remained unchanged.
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A longer-duration chart shows that the trend is nobody's friend as it simply does not exist and is whatever the BEA decides it should be.
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But the biggest surprise is what we have been saying for months, namely the relentless build up in inventories:
The change in real private inventories added 0.45 percentage point to the first-quarter change in real GDP after subtracting 0.10 percentage point from the fourth-quarter change. Private businesses increased inventories $99.5 billion in the first quarter, following increases of $80.0 billion in the fourth quarter and $82.2 billion in the third.
it is so bad that even the world's biggest permabull, Joa Lavorgna is warning that the upcoming inventory liquidation...
The near $100 billion increase in Q1 inventories means we could see a substantial slowing in the current quarter.
— Joseph A. LaVorgna (@Lavorgnanomics) June 24, 2015 [9]
... will be bad. How bad? Well, it may well be the catalyst that finally tips the US into the next recession as we showed over the weeeknd [10].
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