OT: Continued QE ~ GDP Misses
posted on
Jun 27, 2013 12:14AM
ONE COUNTRY, ONE METAL
Remember the key component of the Fed's baffle with BS strategy: namely "baffle with BS."
Following yesterday's epic trifecta of economic growth when durables, housing and confidence data all slammed expectations, it was up to GDP to be the bad cop. Sure enough, following the already disappointing first Q1 GDP revision which revised the preliminary 2.5% number to 2.4%, today economists were expecting an unchanged print. Instead they got a crash to 1.77%. And on what? Why the collapsing US consumer whose true colors have finally come out in the final Q1 GDP revision: responsible for 2.40% of the GDP print in the first revision, Personal Consumption Expenditures tumbled to just 1.83% of GDP. In absolute terms, PCE plunged from 3.4% to 2.6% on expectations of 3.4%. There goes the buying power of the overlevered, undersaved US consumer.
And perhaps just as disturbing was that Fixed Investment, i.e. CapEx, cratered to only 0.39% of the GDP print, down from 0.53% in the first revision, and 0.52% in the prelim. This was the lowest Fixed Investment number since Q3 of 2012.What is worst, is that non-residential fixed investment crashed from 2.2% to 0.4%. In other words, growth CapEx is now officially dead.
Dont worry though: 4 years of QE may not have led to sustainable 2%+ growth, but another 4 years certainly will. Or maybe another 40. At this point does anyone even care?