Gary Shilling: "Q2 GDP Was Closer To 1% Than To 3%. It Could Even Be A Negative Number"

Zero Hedge ^

[Perdogg]

This week, in the aftermath of the Q1 -2.9% GDP disaster, the biggest "non-recessionary" drop in 67 years which was blamed on harsh weather (because there have never been harsh winters in the past 67 years), we get the first glimpse of what Q2 GDP was in the US economy. It is expected to print just shy of 3%. However, one person disagrees: Gary Shilling believes that not only will Q2 GDP be closer to 1% than to 3%, there is a fairly good chance it could be negative, which of course would mean that the US economy has officially entered a recession.

Shilling's take:

Special Report: No Spring Thaw

The consensus of economists looks for second quarter real GDP growth, which will be released July 30, of 3% vs. the first quarter at annual rates. It believes the 2.9% drop in the first quarter was cold weather-driven, and a rebound in the second quarter is the prelude to 3%-plus growth in the second half of the year. As in the last several years, the herd is likely to be disappointed.

[tacticalogic]

Somebody cooking the books again? Cooking the books looks to be SOP these days.

They're cooked down to pink slime, then sold to McDonald's to make hamburgers.

[RckyRaCoCo]

the question is for who?

Why The Puppet Masters of course...

[newnhdad]

shouldn’t the number have been released by now? Or are they looking to do a doc dump filled with false assumptions and seasonal adjustments so Obama can lave for vaca with something positive to say like “hey, it could be worse”

[no-to-illegals]

I think you might have something there. Horror stories galore.

[dynachrome]

We must be vigilant against the Kulaks and wreckers of the Tea party.

[House Atreides]

Not stated in the article is that whatever GDP figure they come up with, it is OVERSTATED. The Bureau of Labor Statistics (BLS), in arriving at their FINAL GDP estimates each quarter, ADJUSTS them by the amount of inflation that occurred during the period. For example, if an UNADJUSTED GDP growth figure for a period is at a 3% rate and inflation during the period is measured at a 1% rate, the ADJUSTED (i.e., constant dollar value) GDP growth rate is 2%. However, if the REAL inflation rate for the period would be 4% at an annual rate, the GDP ADJUSTED (again, in constant dollar values) growth rate would be MINUS 1%. In other words the economy would be contracting instead of expanding.

Many folks believe that the BLS is intentionally understating the rate of inflation. This serves the dual purpose of keeping costs down for inflation adjusted expenditures (e.g., Social Security, military retirement payments) plus painting an BOGUS overly optimistic figure for the growth of the economy.

Many folks also believe that the pre-adjustment GDP figures are also falsely measured to appear larger than they actually are as discussed in the article that is the subject of this thread.

In other words, things are substantially WORSE than our government is telling us.

[equalator]

the answer to this is that we need more mexicans

[stylin_geek]

If you back out government spending, things are even worse.

If I understand correctly, government spending is considered part of GDP.

Which is madness, but, there it is.

[hans56]

Exactly what I was thinking.
1984 wasn’t suppose to be a how to do manual.

[upchuck]

I’ve heard Herman Cain say on his radio program many times:

That 17 BILLION in debt can never be repaid and it’s never going away.

Amen.

[RayChuang88]

In the end, the biggest problem is that the new Obamacare mandates starting this year (2014) are slowing down the economy because companies--still just unsure what those mandates mean--are not willing to hire on a larger scale until we get clarity on the mandates.

[SampleMan]

I don’t disagree, just pointing out that even using their numbers, it’s a technical recession

[hinckley buzzard]

That's right. Government spending is counted as part of the GDP.

[Chgogal]

Zero Hedge is always wrong, right?

[stylin_geek]

Since we’re currently borrowing 40 cents of every dollar spent, what does the math say about the real economy?

Kind of scary, isn’t it?

[blam]

I don’t believe anything anymore.

[Iron Munro]

[plain talk]

“It is funny - the contrast between claims of unstoppable global warming - and also the claim that cold weather had an unprecedented, very negative, effect on economic growth.”

Yes I am convinced that liberals actually like to make the case that hotter weather means global warming and colder winters mean global warming. They seem to relish explaining how colder weather is evidence for global warming. Just a theory — but I think they want to break the public from independent thought and common sense and insist we just believe anything and everything they say. Its a form of conditioning.