Economic Growth Worst In Two Years As Investment, Durables Spending Fall

Investors Business Daily ^ | April 29, 2016 | JED GRAHAM

[expat_panama]

After crawling ahead at just a 0.5% annual pace in the first quarter, the slowest in two years, the American economy is due for a bounce — but how high?

The jury is out whether the economy has simply hit another speed bump or is facing a more fundamental slowdown, but some details in Thursday’s Commerce Department report point to the latter.

U.S. GDP also fizzled at the start of 2014 and 2015, shrinking 0.9% in the former and edging up 0.6% last year...

Yet it’s iffy whether the economy can rebound to the same extent...

On the plus side, some really bad news is out of the way.

Financial markets have rallied from an early 2016 rout after hitting bottom on Feb. 11.

After crashing well below $30 a barrel, oil prices have climbed back above $45...

Inventory destocking, which subtracted one-third of a percentage point from GDP growth — and acted as a drag for the third straight quarter — may be less of an issue going forward.

Lastly, the 3.6% drop in defense spending looks like an anomaly...

...3% GDP growth the rest of the year is likely, with growth of 2% or more this quarter...

...Whether the economy bounces back as strongly as last year will ultimately depend on income growth, and so far the data don’t look great, despite solid job gains. One problem may be that those gains have been tilted toward lower-pay jobs.

Despite recent pay hikes from Wal-Mart (WMT), Costco (COST) and Target (TGT), federal income and employment taxes withheld from paychecks are up 3.3% from a year ago since mid-March. That’s an improvement from growth below 3% earlier in the year, but still well below the 5%-plus gains that helped the economy rebound a year ago.

[expat_panama]

Here's the report yesterday that started this topic--

--and while economists always have something "on the other hand", the political buzz has become increasingly negative as seen in the headlines --New York East Coast headlines no less:

Obama's Limp Economy an Albatross for Hillary - Charles Gasparino, NYP
Obama Weighs His Economic Legacy - Andrew Ross Sorkin, New York Times
Yesterday's GDP Number Wasn't Disappointing - Justin Fox, Bloomberg
Barack Obama's Economic Growth Anemia - Editorial, Investor's Business
Where Did All the Government Jobs Go? - Annie Lowrey, New York Times
The Global Economy Is 'Stimulus' Weary - Jeffrey Snider, RealClearMarkets

[scooby321]

How this man gets away with no surceases anywhere is beyond me.

[expat_panama]

Whoa, a happy end'o'the week and end'o'the month to all!  Our stock rally seemed to end yesterday too, for some reason stock indexes reversed hard downward just before closing bell.   IBD admits we had a new distribution day but the current count is unchanged as the tally also got deducted an old one that no longer applies.

So maybe this is may not quite be an aging crumbling rally, but imho it's making me nervous.

Futures traders see a shift too this morning w/ stock indexes @ -1.02% and metals +1.69%.  Add to that an even bigger econ report dump than the one we had yesterday:

8:30 AM Core PCE Prices
8:30 AM Employment Cost Index
8:30 AM PCE Prices
8:30 AM Personal Income
8:30 AM Personal Spending
8:30 AM Personal Spending
8:30 AM Core PCE Prices
8:30 AM Employment Cost Index
9:45 AM Chicago PMI
10:00 AM Michigan Sentiment - Final
 

[shelterguy]

The reason the economy was dead in the first quarter is because it snowed somewhere, or rained, or got sunny. Yeah, that’s why it sucked. Plus it is W’s fault. A bad economy is also caused by racism.

[The Antiyuppie]

Soviet Propaganda Rule #1: The BIG lie. Lie BIG, and repeat constantly and consistently. Outrageous and outlandish statements magically turn into inarguable facts this way!

[expat_panama]

Somehow O has been totally exempt from any disparaging critiques. After have been portrayed as the Messiah for years he’s now magically been recast as a non-person.

[Popman]

The economy is doing great...

As compared to Venezuela...

Obamacare the anchor dragging the ship down...

[ReaganGeneration2]

Hillary! will yell at us that it’s all great, and she will continue this strong economy as it STILL recovers from Bush.

Meanwhile, roughly half of Republicans will focus on criticizing the GOP nominee.

[Senator_Blutarski]

It is an election year. They are getting the bad news over early and will cook the books the remainder of the year.

[exDemMom]

Where Did All the Government Jobs Go? - Annie Lowrey, New York Times

I was curious about this one, since I have seen that essential government functions are being cut (in favor of increasing wealth redistribution). But when I saw the article, it was whining about Bobby Jindal's clean up of bloated state government agencies in LA, not cutting back on the essential functions.

Although the whole article was whiny and critical of Republicans who want to cut spending, it had this little gem in it: "Since the recession hit, private employers have added five million jobs and the government has lost 323,000. The country has recovered from the recession. But public employment has not."

From where I"m sitting, it looks like the private sector picked up over 4.5 million jobs, for the small price of cutting less than half a million government jobs. If those 323,000 former government employees can't find employment with those millions of new jobs, just maybe they aren't looking hard enough?

[griswold3]

You know how.
In a recent NYT interview, Obama said the American people don’t appreciate the benefits of his economic policies and he regrets not doing a better job of promoting the country’s economic recovery. It’s never his fault. It’s your fault.

[expat_panama]

...getting the bad news over early and will cook the books...

There are some books that cannot be cooked:

[expat_panama]

...the private sector picked up over 4.5 million jobs...   ...323,000 former government employees...

We haven't been hearing much about it on the FR or on talk radio becuase it flies in the face of the narrative, but reality is that the federal workforce has been shrinking, a lot, and for a long time.

[Buckeye McFrog]

How this man gets away with no successes anywhere is beyond me.

Two words:

Affirmative Action

He's just a more plainly visible example than most.

[exDemMom]

Interesting.

I went to a seminar featuring some HR people the other day. They spoke of the difficulty of luring people away from the private sector to come work for the government.

It probably does not help that it takes so long both to place a job announcement and to hire people after the job is announced. The process can take months... potential workers can easily find private sector employment before the HR system fully processes their job application.

[Soul of the South]

“We haven’t been hearing much about it on the FR or on talk radio becuase it flies in the face of the narrative, but reality is that the federal workforce has been shrinking, a lot, and for a long time.”

Although the federal government full time workforce has declined, the number of contract employees and consultants has exploded. It is nearly impossible to get a handle on the number of contract employees, as the linked article discusses.

http://www.govexec.com/contracting/2015/03/even-cbo-stumped-size-contractor-workforce/107436/

If this graph represented total federal employment (contract and payroll) would it show the same trend?

Look also at the segments of the federal workforce. The space program (NASA) has seen a significant decline in workers as the government has outsourced space flight to Russia and federal subsidized private companies. Defense has also declined with the drawdown in the size of the military. If Defense department employment dropped by 25% while HHS, HUD, DOE, EPA, and other bureaucracies grew, should we applaud the government?

Advances in information technology has negatively impacted administrative employment in private industry and government. One key question is has government used technology as effectively as private industry to replace clerical jobs. If not, the reduction in federal employment is not impressive.

Finally, consider the size of the federal payroll, including contractors, in dollars not headcount. We know compensation in the public sector has grown disproportionately to the private sector.

[ProtectOurFreedom]

Interesting that this article makes no mention of the total disaster that is Obamacare. The enormous losses by insurers on the Obama wet dream are a HUGE drag on the economy these past several years.

[ProtectOurFreedom]

There was a thread last night about the absolutely HORRIBLE turnover at TSA and how it’s causing poor services at airports. The data showed about 11% annual turnover, WAY below the private sector. People stay at cushy government jobs a long time — almost an average of TEN years for TSA screeners. Those who like government jobs sure stay there.

At the highest levels, the government sure attracts the drek.

[Stosh]

Are members of the military included in their determination of “total federal personnel”?

[Sam Gamgee]

How do you spell delusional? The economy has been weak for a long time now and with the world essentially in recession I don’t see that changing.