Neal Dutta of Renaissance Macro tells it like it is in a note titled GDP = USELESS:
Posted on 06/25/2014 5:47:58 AM PDT by kristinn
The U.S. economy contracted at a much steeper pace than previously estimated in the first quarter, but there are indications that growth has since rebounded strongly.
The Commerce Department said on Wednesday gross domestic product fell at a 2.9 percent annual rate, the economy's worst performance in five years, instead of the 1.0 percent pace it had reported last month.
While the economy's woes have been largely blamed on an unusually cold winter, the magnitude of the revisions suggest other factors at play beyond the weather. Growth has now been revised down by a total of 3.0 percentage points since the government's first estimate was published in April, which had the economy expanding at a 0.1 percent rate.
The difference between the second and third estimates was the largest on records going back to 1976, the Commerce Department said.
Economists had expected growth to be revised to show it contracting at a 1.7 percent rate. Sharp revisions to GDP numbers are not unusual as the government does not have complete data when it makes its initial and preliminary estimates.
(Excerpt) Read more at foxbusiness.com ...
Point for you and completely true. Thanks.
When hamburger costs $5/lb. and every item has been downsized so that “a pound” of coffee is now 11 oz., most people are having trouble just surviving in this horrible economy.
But this is really what the Libs want. A depressed economy filled with low information, dependent voters—people who think the Government should them everything they need.
Neal Dutta of Renaissance Macro tells it like it is in a note titled GDP = USELESS:
In this case, what is a “cycle” as in the cycle lows and cycle high noted?
from Business Insider:
Forget about today’s ugly Q1 GDP report because America’s services industry is hot.
According to Markit, U.S. services purchasing managers index (PMI) unexpectedly jumped to 61.2 in June from 58.1 in May.
This was stronger than the 58.0 expected by economists.
“Business activity in the US service sector surged higher in June,” said Markit’s Chris Williamson. “A record high in the services PMI follows news from the flash manufacturing PMI that factory output grew in June at the fastest rate for just over four years. Combined, the two PMI surveys indicate that business activity is growing at the strongest rate seen since prior to the financial crisis.”
It was really -1.7%. Second quarter numbers are at -1.1%. Both quarters combined come to -2.8%. but if they report the numbers as is, then it qualifies as a recession. So they report -2.9% in Q1 and +0.1% in Q2. Overall number is the same, but no recession.
The goal here is to be able to report positive growth in second quarter. And the only way they can do that is to exaggerate the decline in quarter one.
Maybe one more Recovery Summer will fix the economey, right?
Consumer confidence. Long way from peak but near a cyclical high from the bottom:
No 2Q is still ongoing... (ends 6/30) The first report of 2Q14 GDP will be in July 30th.
This was breaking news on CNN homepage 15 min ago, now gone. Crickets on Yahoo, NBC, CBS. They are working furiously to figure out how to spin this.
I guarantee you that they will report growth in Q2 based upon this lowered floor for Q1, and that the overall loss for both quarters combined will be below -1.7%.
Is it Recovery Summer yet?
We’re in the fifth day of the sixth “summer of recovery”.
If they can miss it by -3% and get away with it, does that mean your >2% is actually in the negatives and in reality a recession?
And the stock market is up again this morning.
Total disconnect with reality.
Here’s Why The GDP Report’s Healthcare Spending Estimate Was Such A Disaster
Reuters
Healthcare spending plunged in the Bureau of Economic Analysis’ latest estimate of first-quarter GDP growth, accounting for two-thirds of the revision that tumbled overall growth to -2.9%.
In the BEA’s first estimate of first-quarter growth, healthcare spending was projected to explode by 9.9%. It was subsequently revised to 9.1%. But the latest estimate had healthcare spending plunging to -1.4%.
“So much for the BEA’s initial view that the start of Obamacare triggered a surge in spending on healthcare,” Pantheon Macroeconomics’ Ian Shepherdson said. “The press release offers no detail on what triggered this massive revision.”
So what triggered that massive revision? The BEA told Business Insider the revision was based on a new set of data from the Commerce Department’s quarterly services survey.
That survey provided a few important data points: Healthcare and social assistance spending, overall, plunged 2%. Revenue for hospitals (-1.3%), medical labs (-6.4%), and outpatient care (-3.6%) all fell in the first quarter of 2014 when compared to the final three months of 2013.
A BEA spokesman said the agency had previously used “information on Medicaid benefits and on ACA insurance exchange enrollments as well as other available data” to determine the spending increase.
“These data sources suggested a relatively large increase in health care spending. Based on these data sources, we had assumed that ACA related effects boosted consumer spending on healthcare services by about $37 billion for 2014Q1 (in current dollars). The QSS data now available does not show this same increase,” the spokesman said.
Among the first to convey skepticism about the BEA’s initial estimate was Peter Orszag, the former OMB director. His argument: For spending to have exploded with healthcare employment growing at an average pace, it would mean an incredible boom in in healthcare productivity.
“It would mean that somehow we’re able to produce so much more health care with each worker, in a dramatic fashion, starting magically with the fourth quarter of last year,” Orszag told Business Insider in May. “OK, maybe? It’s just not really plausible. If all of this were real, it would mean that suddenly, magically, health-care workers have become a lot more productive.”
Orszag recently posted a chart on Twitter (below) showing the BEA’s initial advance estimate didn’t square with the QSS data released Wednesday. He suggested at the time it likely meant healthcare spending will be revised downward.
Though analysts suggested the data was subjected to revision, few could’ve predicted such an incredible swing. Jason Furman, the chairman of the White House’s of the Council of Economic Advisers, said it’s the biggest revision in roughly 30 years.
They’ve even tweaked the formula to make it higher over the last few years.
Popular music sucks, Muslims are running wild, folks are worried about climate change, drugs are all the rage... We’re reliving the 1970s except with better television shows.
LOL. No actually the GDP number is the extreme outlier in all the other macro data. It’s a totally worthless number.
No. read the BI article I just posted in this thread. The HC number estimation techniques were all botched up. This GDP number is worthless. All the other underlying data shows decent growth which we will see in the 2Q number.
People got healthier? Quit buying healthcare? What?
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