Free Republic

Do you know why the U.S. economy shrank almost 3 percent in the first quarter of this year? When the news of the dreadful gross domestic product (GDP) number came out last week, many were surprised, but none were more surprised than the folks in the Obama administration. Many of their supporters had been saying this was the year of a real economic recovery. The quick reaction was to blame the bad GDP numbers on the weather, and it is true that much of the country did have record cold temperatures, but in all likelihood the weather was only a...

In the first quarter of 2014, GDP shrunk 2.9 percent and most of the reason is because health-care spending declined. That doesn’t mean we’re in for a recession though. Obamacare did help crash the economy. Only not in the way its critics thought it would. The Commerce Department on Wednesday revised the growth figures for the first quarter of 2014, and concluded that the economy shrunk at a 2.9 percent annual rate. This comes a month after the government slashed its initial estimate from an annual growth rate of .1 percent to a decline of 1.0 percent. At the time,...

This country is a bunch of lions led by donkeys, as the Germans said about the English Army in the first war. The latest Obama-related bray is the revised GDP numbers for the first quarter. Economists expected the economy to grow by 1.9% even after a discount for the cold weather. Instead the initial estimate saw a contraction of 1%. As we approached the revision to the initial estimate, we began hearing that perhaps things would be even worse in the next estimate. They were. The revision came in at a contraction of 2.9% for the first quarter. But...

For months the administration, financial pundits and Wall Street analysts made it a point to inform Americans about the healthy state of our economy. One of the key metrics they’ve used as proof of recovery was the Gross Domestic Product (GDP) which measures the productive output of the U.S. economy as a whole. Earlier this year the U.S. Bureau of Economic Analysis noted that this measure was showing positive growth. But now, after a second official revision, all of that purported growth used to goad consumers into spending more money on homes, cars and other goods has been revealed to...

The US GDP fell at an annual rate of 2.9 percent in the first quarter, its slowest rate of growth since 2009, in the middle of the recession. And yet no one seems to mind. Stock markets didn't plummet, and no one is forecasting yet another recession. A shrinking GDP is never great news, of course, but here are a few reasons why economists and markets are shaking off the biggest economic contraction in more than five years.

The US economy shrunk at a much larger rate than previously estimated in the first quarter.The GDP fell by 2.9%, the economy’s worst performance since the Great Recession. (Trading Economics)But it wasn’t that long ago that the White HOuse bragged that Obamacare saved the first quarter GDP from shrinking. The NRCC reported: By now many of you have seen the news that our GDP declined steeply in the 1st quarter.A drop of 2.9 percent is the type of precipitous fall we haven’t seen since the first months of 2009.But it was less than 2 months ago that the White House...

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...

Now that the third revision to gross domestic product is in, we can make a back-of-the-envelope calculation of just how much the unusually cold winter cost the U.S. economy. But obviously, the contraction wasn’t all weather. So, how much? MarketWatch put that question to Gus Faucher-Wanker, senior economist at PNC. “My sense is that, in terms of contraction, more than half was due to the weather. I don’t think it had much of an impact on trade, didn’t have much to do with government, but I do think [the weather impacted] the weaker consumer spending, the drag from inventories, and...

The U.S. economy shrank at a steep annual rate of 2.9 percent in the January-March quarter as a harsh winter contributed to the biggest contraction since the depths of the recession five years ago.

Hooray! The Gross Domestic Product shrank by 2.9% in the first quarter of the year. "This recovery is underway." Your humble correspondent was very careful to put the previous sentence in quotes because I don't want you to think I've taken leave of my senses. This amazing conclusion comes to us courtesy of CNN Money spinmeister Annalyn Kurtz who starts out on a rather gloomy note but manages to spin her way into economic joy:

YIKES! We just got the third revision to Q1 GDP, and it was horrible. After an initial estimate showing a mere 0.1% gain in growth in the first quarter, the government now says the economy shrunk at a staggering 2.9% pace, making it the worst quarter Q1 2009, at the pit of the financial crisis. So should you worry? Absolutely not.

Remember back in April, when the first GDP estimate was released (a gargantuan by comparison 0.1% hence revised to a depression equivalent -2.9%), we wrote: "If It Wasn't For Obamacare, Q1 GDP Would Be Negative." Well, now that GDP is not only negative, but the worst it has been in five years, we are once again proven right. But not only because GDP was indeed negative, but because the real reason for today's epic collapse in GDP was, you guessed it, Obamacare.Here is the chart we posted in April, showing the contribution of Obamacare, aka Healthcare Services spending. It...

The latest data shows the U.S. economy contracted significantly more than previously estimate in the first quarter of this year.On Wednesday, the Bureau of Economic Analysis released its third and final estimate of real gross domestic product for the first three months of 2014. The release showed output in the U.S. declining at an annual rate of 2.9%. This is relative to fourth quarter 2013, when real GDP grew 2.6%.The final number is also down from BEA’s negative 1% second estimate released last month, and even more sharply from its first estimate that showed GDP growing 0.1%. While this makes Q1 was...

The United States is considering airstrikes against Islamic rebels with our newest ally, um, Iran. from Reuters: Joint action between the United States and Iran to help prop up the government of their mutual ally would be unprecedented since Iran's 1979 revolution, demonstrating the urgency of the alarm raised by the lightning insurgent advance. As a courtesy to those readers who don't speak Obama, let me provide a translation: "We've screwed up so badly that we have to have enemies like Russia, China, and Iran bail us out in foreign policy and war, over and over and over again." This...

When it comes to the U.S. economy, the glass just went from half full to half empty. At the start of the year, economists were optimistic. Perhaps the economy would grow 3% this year, they said, instead of the measly 2% pace it's been stuck at for the prior three years. So much for that hopeful thinking. Half-way through the year, forecasts are being slashed. The latest Zorro move comes from the International Monetary Fund. The organization said Monday that the U.S. economy would only grow 2% this year, down from it earlier forecast of 2.8%. This comes on the...

Economists, investment analysts, and politicians have spent much of 2014 bemoaning the terrible economic effects of the winter of 2014. The cold and snow have been continuously blamed for the lackluster job market, disappointing retail sales, tepid business investment and, most notably, much slower than expected GDP growth. Given how optimistic many of these forecasters had been in the waning months of 2013, when the stock market was surging into record territory and the Fed had finally declared that the economy had outgrown the need for continued Quantitative Easing, the weather was an absolutely vital alibi. If not for the...

Remember when the "thesis" for Q2 growth was that just because Q1 was so horrible, Q2 will have to bounce back? Well, oops. Following the horrendous ADP data, the abysmal April trade numbers, and the disastrous Q1 productivity collapse (which certainly should make the Fed reassess their baseline estimate for 2.8% GDP growth), the penguin parade in which sellside "analysts" rush to show just how clueless they really are, has begun, first with Bank of America which cut its Q2 GDP forecast by 0.5% to 3.6%, then Credit Suisse lowering its Q2 forecast by 1 whopping percentage point to...

As Thursday’s revised gross domestic product number suggests, Main Street knows much more than the Beltway economists about how bad a shape the US is in. Despite the S&P 500 Index hitting all-time highs almost daily, Americans are voting with their feet. The eggheads in Washington, from Treasury to the Fed, were all projecting strong growth for the first quarter of 2014 — even after the first read came out saying the “growth” was 0.025 percent, or an annualized 0.1 percent, for the quarter. And then Thursday’s first revision showed an annualized loss of 1 percent. Frequently, your local diner...

Just when you thought that Italy’s crazy government couldn’t get any more insane, it hit on a gimmick for improving the international perception of its economy. Just include the black market in its GDP. Never mind that the black market isn’t taxable, difficult to estimate and not exactly a good thing. Italy is changing how it calculates its gross domestic product, a measurement of the overall economy, to include black market activity — everything from prostitution to illegal drug sales to smuggling and arms trafficking. Economists predict illegal sales will add 1.3 percentage points to GDP this year.Hey, it’s one...

May 30, 2014 - 10:21 AM John_Rubino As expected, the US revised the most recent quarter’s GDP from barely positive to sharply negative today. But once again the true extent of the problem was hidden by some statistical sleight of hand, in this case wildly-optimistic inflation assumptions. Here’s an excerpt from the Consumer Metrics Institute’s just-published analysis: May 29, 2014 – BEA Revises 1st Quarter 2014 GDP Sharply Downward to Outright Contraction at Nearly a 1% Annual Rate: In their second estimate of the US GDP for the first quarter of 2014, the Bureau of Economic Analysis (BEA) reported that...