Thursday, July 31, 2014

IDENTICAL FORECASTS for the Weather and U.S. Economy

FOGGY AND DISMAL

The New York Times rushed this news story into its headlines: "Bouncing Back, Economy Grew 4% for Quarter"  

It included the rosy prospects, that [Economy] "rebounded strongly in the second quarter of the year, shaking off the negative effects of an unusually harsh winter and stirring hopes that it might finally be establishing a solid enough footing to put the lingering effects of the recession squarely in the past.  During the first quarter, output shrank at a rate of 2.1 percent, less than had been reported. The department had earlier said that first-quarter output fell 2.9 percent."

... then effused, "[Controversial leader] Obama heralded the positive economic news on a visit to Kansas City, MO."

"Democrats are hoping to use the signs of an improving economy as a selling point in the run-up to midterm elections as proof their policies are working."

Then why this economic data, released today, July 31?
Lovingly lifted from  ZeroHedge

We warned last month that under the covers, Chicago PMI looked a lot weaker than the headlines and this morning's collapse confirms that. Against expectations of a small rise to 63.0, Chicago PMI plunged from 62.6 to 52.6 (13-month lows) for the biggest miss on record. 

According to the release itself, "A monthly fall of this magnitude has not been seen since October 2008 ." The was an 8 standard-deviation miss from analyst expectations. New orders, inventory, production, order backlogs, and prices paid all dropped (but employment rose?). This is the biggest 2-month drop since Lehman (and 2nd biggest since 1980). We await the seasonal adjustment "correction" as MNI get the call from Yellen.

With a 20% chance of thunderstorms, accompanied by huge lightning bolts from outta nowhere.

But, this caveat from the good folks at the Bureau of Economic Analysis (BEA)

      The Bureau emphasized that the second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3 and "Comparisons of Revisions to GDP" on page 10).  The "second" estimate for the second quarter, based on more complete data, will be released on August 28, 2014.
    The increase in real GDP in the second quarter primarily reflected positive contributions frompersonal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment.  Imports, which are a subtraction in the calculation of GDP, increased.

I suggest that the NYT itself, offers the truth of the fluffed-up numbers:  so that Dems will have something to point to, leading up to the November mid-term elections... AS THE GRAPH ABOVE POINTS OUT HAPPENED, THOUGH TO A LESSER DEGREE, ALSO IN 2012.

Stay tuned, because on August 28, 2014, this 4% number will be going down.  By how much?  I'd say by 1% or slightly more; giving 2014 GDP a net growth of Zero for 2 quarters.

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