Economy in U.S. Stalls on Slump in Business Spending, Exports in Q1

[jaichind]

GDP annualized QoQ slowed to 0.2% when compared to 2.2% in Q4 2014 and the expected 1.0% from economist surveys.  Causes might be strong USD, weather, as well as investment slumps etc etc

Thanks Obama ?

[King]

https://uselectionatlas.org/FORUM/index.php?topic=211734.0

[Tender Branson]

GDP is up by 3% though compared with Q1, 2014.

That's really solid growth.

http://bea.gov/newsreleases/national/gdp/2015/txt/gdp1q15_adv.txt

[table 8]

[Ebsy]

Don't these Q1 slowdowns or ever shrinkages happen almost like clockwork though? Is it really worth worrying about?

[jaichind]

Don't these Q1 slowdowns or ever shrinkages happen almost like clockwork though? Is it really worth worrying about?

You are right. But the economist estimates already took that into account and came up with an estimate of 1.0%.  The number, which are often revised, came in at 0.2%. It is not the absolute amount but the under-performance relative to expectations. 

[Ban my account ffs!]

Yeah I was expecting 38% growth from 4Q 2014 to 1Q 2015.  Now I think the world is ending!

[TheDeadFlagBlues]

Don't these Q1 slowdowns or ever shrinkages happen almost like clockwork though? Is it really worth worrying about?

You are right. But the economist estimates already took that into account and came up with an estimate of 1.0%.  The number, which are often revised, came in at 0.2%. It is not the absolute amount but the under-performance relative to expectations. 

What if those expectations were misguided? Admittedly, I haven't looked into the methodology that the Economist uses but this winter was particularly bad. There are other "fundamentals" which have sharply picked up over the past month or so.

[jaichind]

Don't these Q1 slowdowns or ever shrinkages happen almost like clockwork though? Is it really worth worrying about?

You are right. But the economist estimates already took that into account and came up with an estimate of 1.0%.  The number, which are often revised, came in at 0.2%. It is not the absolute amount but the under-performance relative to expectations. 

What if those expectations were misguided? Admittedly, I haven't looked into the methodology that the Economist uses but this winter was particularly bad. There are other "fundamentals" which have sharply picked up over the past month or so.

When I say economists I mean an average of several dozen economists and not the magazine Economists.  Not that somehow this group of people are deities of any sort but they all get paid to predict these numbers by financial institutions of all sorts and will take care to take all these one off factors into account.  Only thing in the favor of the underlying economic trend is that these numbers are often subject to revisions.

[jaichind]

Thanks to today's larger than expected trade deficit.  I am pretty sure the Q1 GDP figured will be revised to a negative figure.   

Thanks Obama ?

[Tender Branson]

Thanks to today's larger than expected trade deficit.  I am pretty sure the Q1 GDP figured will be revised to a negative figure.  

Thanks Obama ?

Did you not read what I posted above ?

The US economy has grown by 3% compared with the 1st quarter of 2014.

That's gooooood, not bad.

And not "negative growth".

It would be better if the US dumped their annualized reporting scheme and switch to Q/Q and Y/Y reporting, like any other country on the planet. Otherwise it's just misleading and people start to think the economy is actually shrinking when in fact it's growing by a healthy pace ...

[jaichind]

Did you not read what I posted above ?

The US economy has grown by 3% compared with the 1st quarter of 2014.

That's gooooood, not bad.

And not "negative growth".

It would be better if the US dumped their annualized reporting scheme and switch to Q/Q and Y/Y reporting, like any other country on the planet. Otherwise it's just misleading and people start to think the economy is actually shrinking when in fact it's growing by a healthy pace ...

I understand what you are saying.  I am not denying the value of looking at it from a YOY vs QOQ point of view.  My point is that now the revised data which is QOQ will clearly under-perform expectations especially now with the new trade data.   With the trade data I am pretty sure the YOY 3.0% will be revised downward as well.   For all of 2015 I am pretty sure with such weak Q1 numbers the overall GDP growth for all of 2015 will be around 2.5%-2.6%.

But looking at this a a high level, my narrative is that the post 2008-9 downturn has and seems like will continue to under-perform.  Looking at the annual YOY growth data is instructive.

Lets look at the last severe downturn in the USA which was the 1982 recession followed by the recovery

1982     -1.81%
1983      4.64%
1984      7.26%
1985      4.24%
1986      3.50%
1987      3.57%
1988      4.20%
1989      3.68%

Even the last mild recession of 2001 had

2001      0.98%
2002      1.79%
2003      2.81%
2004      3.79%
2005      3.35%
2006      2.67%

Whereas the current downturn and recovery has

2008     -0.26%
2009     -2.80%
2010      2.53%
2011      1.60%
2012      2.32%
2013      2.22%
2014      2.42%
2015     ~2.5%?

So even as the downturn in 2008-2009 was much more severe than 1982 and much more so than 2001, the recovery rates of growth clearly has under performed and will continue to under perform.   

[Tender Branson]

Yes, but the growth rates of the 80s and 90s are a thing of the past.

The US has become an older society over the years, which means more baby boomers retiring than new people coming in due to a lower birth rate, which means the LFP-rate is going down - which results in a lower GDP growth rate.

No major western country in recent years has reached 4% growth, so the US' 3% this year is one of the best.

Nothing to complain here.

[King]

We also paid the price for the 80s rapid growth with a super sluggish early 90s economy. And the measures the Bush administration went to to stimulate the early 2000s growth collapsed the economy.

I don't get why any reasonable person salivates over the idea of 5+% GDP growth in a year. It's been shown to have dire consequences 10 times out of 10.

[Ebsy]

We also paid the price for the 80s rapid growth with a super sluggish early 90s economy. And the measures the Bush administration went to to stimulate the early 2000s growth collapsed the economy.

I don't get why any reasonable person salivates over the idea of 5+% GDP growth in a year. It's been shown to have dire consequences 10 times out of 10.

Are you sure you're a Republican King?

[Slander and/or Libel]

And after the financial crisis, we enacted measures more austere than in the wake of those other recessions. Just look at the government employment numbers in the wake of each, for example.

[jaichind]

OECD just cut USA GDP growth for 2015 to 2.0% from 3.1%.  This is for all of 2015 so there is no issue of QoQ vs YoY.  This is the first post-WWII recovery where GDP growth has yet to crack 3% in any of the years after the recovery and we are already in year 6 of the recovery.  To be fair OECD expected 2.8% GDP growth for USA in 2016 but that will most likely ended being slashed just live all the previous years and even that is below 3.0% 

Thanks Obama ?

[AggregateDemand]

Democrats want more money to spend. Don't want to grow the economy.

Republicans are surely to blame.

[Slander and/or Libel]

Austerity works, folks. See?

[AggregateDemand]

Austerity works, folks. See?

Austerity is not the size of the deficit. It's the amount of funding you transfer from productivity and market-correction to superfluous dead-weight social spending.

With the exception of Medicare Part D, no one has done more to bring austerity to America than the Democratic Party.

[Slander and/or Libel]

Words have meanings.

[AggregateDemand]

Words have meanings.

Austerity is shrinking the money supply or refusing to expand the money supply via public governance. What do you think is the end result of transferring $2T to people who don't work, while R&D (via DoD and NASA), public infrastructure, and employment policy go neglected?

[Ebsy]

I think the benefits from people not starving or dying of treatable diseases far outstrip those of a balanced budget or whatever AggregateDemand wants.

[AggregateDemand]

I think the benefits from people not starving or dying of treatable diseases far outstrip those of a balanced budget or whatever AggregateDemand wants.

First, 100% of those expenditures do not go to people in need. In fact, the situation is so bad that some of my clients, who are very wealthy, still collect Medicare and Social Security benefits. Keep in mind that they have already benefited their entire lives from tax subsidized private retirement, under the false pretense that they would collect social security.

Second, most of the people on Welfare are capable of working and would be better off if they worked. Instead of giving them employment subsidies, we tax them out of the market place, and then vow to take away their subsidies if they try to work a min wage job.

We can't reform the system so that it actually works because liberals are paranoid that people will be dying in the streets. The cost of your paranoia is much too high.

[jaichind]

Latest Fed projections for USA GDP growth in 2015 is now 1.8-2.0.  It keeps on getting lower and lower.