U.S. Economy Shrinks By Most Since Great Recession in 1Q (-2.9%)

Reuters via Fox Business ^ | Wednesday, June 25, 2014

[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.

[RegulatorCountry]

There was a fairly pronounced downward spike in the business world that began in February and really didn’t start easing until May. Other than Obamacare and the weather, I have no explanation and neither does anyone else I know. It just died. Timing seemed oddly tied to that Malaysian plane thing, but I can’t imagine that actually having anything to do with it.

[Ted Grant]

I though Q4 2013 was revised down to a -0.1.

[kabar]

Quantify “decent growth.” Even assuming 3% growth every other quarter in 2014 means 2014 GDP will be 1.5% at best!

[dadfly]

who are the kidding? we never got out of the “great recession.”

[CSM]

“We’re reliving the 1970s except with better television shows.”

I’m not so sure about even that! Better phones? Absolutely. Better TV shows? I’m dubious!

[RegulatorCountry]

Call me an old fart but I actually miss substantial phones with an analog bell ringing. All the electronics and plastics seem so throwaway. Adds to the sense of surreality. With the volume of calls I have coming in now, I’d hate to have to use a rotary dial for all of them, but there’s still something oddly satisfying about using one.

[Wyatt's Torch]

Methodology screw up with the new Obamacare numbers coming into play.

Here’s Wells Fargo’s take:

First Quarter Contraction Deeper Than Initially Thought

Recording larger declines with each revised estimate, real GDP contracted at a 2.9 percent annual rate in Q1.
A swift rebound in economic activity should unfold in Q2, with firming rates of growth expected in H2.

Health Care Spending Reversal
- The third pass at first quarter GDP resulted in the largest quarterly contraction since Q1 2009. Consumer healthcare
spending, once thought to have been a positive, subtracted
0.16 percentage points from overall growth. As such, total
consumer spending is now reported to have expanded at a
1.0 percent annual rate, substantially lower than the previously reported 3.1 percent estimate.

[HeartlandOfAmerica]

Hmmm. I might be wrong, but I believe that the last 3 months of GDP are a predictor of the economy in the next 3-6 months. I also may be wrong, but GDP for the last 3 months has gone from worse to worser to this months worstest.

Not looking good for the home team. Especially with this administrations penchant for revised numbers a month later. What if next month gets revised downward even more than this month's horrible numbers??

[kabar]

From Tyler Durden:

Because as the next chart below shows, between the second and final revision of Q1 GDP something dramatic happened: instead of contributing $40 billion to real GDP in Q1, Obamacare magically ended up subtracting $6.4 billion from GDP. This, in turn, resulted in a collapse in Personal Consumption Expenditures as a percentage of GDP to just 0.7%, the lowest since 2009!

Don't worry thought: this is actually great news! Because the brilliant propaganda minds at the Dept of Commerce figured out something banks also realized with the stub "kitchen sink" quarter in November 2008. Namely, since Q1 is a total loss in GDP terms, let's just remove Obamacare spending as a contributor to Q1 GDP and just shove it in Q2.

Stated otherwise, some $40 billion in PCE that was supposed to boost Q1 GDP will now be added to Q2-Q4.

And now, we all await as the US department of truth says, with a straight face, that in Q2 the US GDP "grew" by over 5% (no really: you'll see).

[xp38]

Remain Calm All is Well

[HeartlandOfAmerica]

Yeah, so they release a modified -2.9% so what’s it really? -5%?

Yah huh! there ya be!

[HeartlandOfAmerica]

And Tea Party Extremists!

[Clint N. Suhks]

The MSM won’t care.

[HeartlandOfAmerica]

What dates do the new mandates (business?) kick in? Anybody?

[b4its2late]

Purposely.

[Gritty]

And Tea Party Extremists!

Yes.

Especially Tea Prty extremists!!

[b4its2late]

Global Warming is more important to this bunch. Or it’s a deflection tactic.

[b4its2late]

Exactly.

[alstewartfan]

I thought that Aunt Clara had died...

[Jacktown]

I bought 4 MaxwelHouse Master Blend 44 ounce containers at Sam’s Club online for $8.58 each.

This year my membership more than paid for itself.