Back on March 3, it was none other than a Federal Reserve bank, that of Atlanta, which as we first reported shocked the world or at least those permabullish, consensus-chasing, Wall Street weathermen-cum- economists who assume that a world with $200 trillion in debt will grow at the same CAGR as a world without 4 times global GDP in leverage, when it urgently warned that the Q1 consensus GDP estimate was very wrong.
The Atlanta Fed turned out to be spot on, with its 0.1% forecast relative to the 0.2% first estimate print by the BEA, and in fact, following subsequent revisions which now anticipate Q1 GDP to crash to -1.2%, will show Atlanta Fed, which has Q2 GDP at 0.7%, to have been optimistic.
Perhaps because it was unhappy with the Atlanta Fed hogging all the economic spotlight in 2015, none other than Janet Yellen's own Fed, San Francisco's, moments ago came out with a paper authored by that inimitiable economist Glenn Rudebusch, which seeks to resolve "The Puzzle of Weak First-Quarter GDP Growth" and blames it all on, drumroll, seasonal adjustments, or rather not enough:
The official estimate of real GDP growth for the first three months of 2015 was shockingly weak. However, such estimates in the past appear to have understated first-quarter growth fairly consistently, even though they are adjusted to try to account for seasonal patterns. Applying a second round of seasonal adjustment corrects this residual seasonality. After this correction, aggregate output grew much faster in the first quarter than reported.
You can read the full surreal piece here, but the punchline is the following - if the unadjusted data, or even the seasonally adjusted data sucks, what do you do? You "double" seasonally adjust it.
Quote the authors:
Figure 4 shows recent real GDP growth—both the BEA’s published seasonally adjusted data in red and our double seasonally adjusted version in blue. The application of second-round seasonal adjustment increases real GDP growth in the first quarter of 2015 from its initial published value of 0.2% to 1.8%. Taking this correction at face value, real GDP growth in the first quarter was stronger and much closer to the economy’s sustainable rate of trend growth.
And if the double seasonally adjusted data doesn't work? Why triple adjust it, then quadruple adjust it, until you get precisely the goalseeked number you want, as US economic "data" promptly devolve to a level of ridiculousness that will make even the Chinese Department of Truth turn green with envy.
That this is sheer idiocy has been clear to Zero Hedge readers for years. In fact, the stupidity behind the spin and goal seeking of "data" has even become clear to the self-appointed Keynesian mouthpiece trolls:
Seasonal adjustments: The last refuge of a scoundrel. $$— Joseph Weisenthal (@TheStalwart) January 5, 2011
But that's not the punchline: the punchline is that since San Fran Fed's Glenn "double seasonal adjustment" Rudebusch is one of Yellen's favorite hometown economists, she now has the green light to completely ignore the weakest economic print since last Q1, and to focus entirely on the best economic print in the US: the surge in part-time senior citizen workers, pardon, the "zero slack" unemployment rate of 5.4%.
She also has the justification why to ignore it: the bad data wasn't seasonally adjusted enough (the good data was seasonally-adjusted just right).
Which may well mean that the Fed, which so urgently wants to hike rates just so it sends the US stock market and the economy, into a repressionary tailspin to be then granted permission to engage in QE4, just to "Trichet" itself, may very well hike rates next month, just as the entire consensus coterie of clueless Wall Street weathermen say there is zero chance of a Fed rate hike in June.
Source: San Fran Fed