U.S. GDP Grew 4.6% In Second Quarter 2014, Up From Earlier Estimates

[Zippyjuan]

http://www.forbes.com/sites/samantha...ier-estimates/

On Friday, the Bureau of Economic Analysis released its third estimate of real gross domestic product for the second quarter of 2014 — covering April, May and June of this year. The release showed output in the U.S. increasing at an annual rate of 4.6%. This is relative to the first quarter when real GDP declined a sharp 2.1%.

The revision is up from BEA’s 4.2% second estimate released last month as well as its 4% advance estimate out in July. The revision, BEA said in a release, was largely due to a larger than previously estimated increase in nonresidential fixed investment and exports. Of the revision the BEA wrote, “The general picture of economic growth remains the same” as when it released the second estimate.

The 4.6% growth in real GDP reflected growing personal consumption, private inventory investment, exports, both residential and nonresidential fixed investment, as well as local government spending. The gains were partially offset by an increase in imports, which negatively impact GDP, and a 0.9% decline in federal government expenditures.

“Given the partial indicators in between the second and third estimate this was broadly anticipated but that doesn’t dull the good news,” Jeremy Lawson chief economist at Standard Life Investments. He also noted that consensus was for the upward revision to be driven by growth in personal consumption but the real driver was fixed business investments with 9.7% growth. This, Lawson says, is a strong sign for future growth and critical for productivity. At the same time the 2.5% personal consumption growth was slightly lower than anticipated but “not a disappointment.”

More at link.

[Lucille]

LOL

Final Q2 GDP Surges 4.6% Thanks To Profit Definition Change; Personal Consumption Weaker Than Expected
http://www.zerohedge.com/news/2014-0...ption-weaker-e

The good news in the just released final Q2 GDP estimate soared by 4.6%, just as Wall Street expected, which was the biggest quarterly jump since 2011 Q4 2011, driven by gains in business spending, where mandatory forced Obamacare outlays led to a $17.5 billion chained-dollars increase in Healthcare spending to $1815.9 billion. Nonresidential fixed investment contributed two-tenths to the revision, net exports contributed one-tenth, and consumer spending contributed one-tenth. Also helping were corporate profits which rose 8.4% in Q2, the most since Q3 2010, once again courtesy of adjustment in definitions (recall the IVA vs CCAdj change we discussed previously).

From the report: "Profits from current production (corporate profits with inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj)) increased $164.1 billion in the second quarter, in contrast to a decrease of $201.7 billion in the first." For the explanation read "Is This The Top? First Quarter Corporate Profits Tumble Most Since Lehman." The definition change was responsible for a drop in Q1 profits which has now shot right back up. [...]

Obviously, this bounce was a much needed rebound from the -2.1% drop reported in Q1 due to "harsh weather", yet one wonders what new and improved changes in definitions and/or mandatory government wealth redistribution programs the BEA will reveal in coming quarter to keep the pro-forma economic growth steady.

The bad news is that, once again, the much anticipated US consumer renaissance, has been delayed, with Personal Consumption, which was supposed to rise 2.9%, instead printed at a final number of 2.5%. In fact the 1.75% (as a percentage of the final total 4.6% Q2 annualized increase) was barely above the 1.5% average from the LTM period as of Q1.

So with Q2 in the books, and with both Obamacare, and the profit definition kitchen sinks already thrown in, we sit back and look forward to how the upcoming "harsh winter" crushes Q1 GDP once again, because the New Normal may be different, but snow sure rhymes.

[acptulsa]

On Friday, the Bureau of Economic Analysis released its third estimate of real gross domestic product for the second quarter of 2014...

A revision of an estimate is newsworthy?

In what universe?

[Ronin Truth]

What will be the revised 2nd Qtr. growth rate AFTER the November elections?

[Zippyjuan]

Numbers are always preliminary when first announced. They make revisions as more complete data comes in- sometimes the revisions are higher, sometimes lower. First quarter revisions were sharply lower. This should be the final revision of second quarter numbers. The following article is from July:

http://blogs.wsj.com/economics/2014/...for-revisions/

But the Commerce Department’s Bureau of Economic Analysis will revise its advance GDP estimate multiple times to reflect new data as it becomes available. The revisions can change the outlook for the U.S. economy, as happened last month when a decline in first-quarter GDP was revised down to its fastest rate of decline since the end of the recession.

When the Commerce Department publishes its advance estimate nearly one month after the end of each quarter, it doesn’t have data for the full three-month period. For segments of the economy like health care, exports and housing investment the agency is forced to make assumptions largely based on historical trends.

As more comprehensive data become available, the Commerce Department publishes a second GDP estimate two months after the quarter’s end and a third estimate three months after.

The agency also does annual GDP revisions, usually during the summer and usually for the past three years’ worth of data. It published the results of the latest annual revision Wednesday, along with the advance second-quarter GDP data. The revision showed that output expanded at a stronger pace in the second half of 2013 but showed a weaker overall recovery.

Finally, the Commerce Department does an even more comprehensive revision of its GDP data every five years.

[tod evans]

From Drudge;



1 in 4 Americans 25-54 Not Working

http://www.weeklystandard.com/blogs/...ng_806178.html

A new chart from the minority side of the Senate Budget Committee shows a startling fact: Almost 1 in 4 Americans between the ages of 25-54 (or prime working years) are not working.

Here's a chart showing those in that age group currently employed (95.6 million) and those who aren't (28.9 million):



"There are 124.5 million Americans in their prime working years (ages 25–54). Nearly one-quarter of this group—28.9 million people, or 23.2 percent of the total—is not currently employed. They either became so discouraged that they left the labor force entirely, or they are in the labor force but unemployed. This group of non-employed individuals is more than 3.5 million larger than before the recession began in 2007," writes the Republican side of the Senate Budget Committee.

"Those attempting to minimize the startling figures about America’s vanishing workforce—workplace participation overall is near a four-decade low—will say an aging population is to blame. But in fact, while the workforce overall has shrunk nearly 10 million since 2009, the cohort of workers in the labor force ages 55 to 64 has actually increased over that same period, with many delaying retirement due to poor economic conditions.

"In fact, over two-thirds of all labor force dropouts since that time have been under the age of 55. These statistics illustrate that the problems in the American economy are deep, profound, and pervasive, afflicting the sector of the labor force that should be among the most productive."

[Ronin Truth]

Numbers are always preliminary when first announced. They make revisions as more complete data comes in- sometimes the revisions are higher, sometimes lower. This should be the final revision of second quarter numbers. The following article is from July:

http://blogs.wsj.com/economics/2014/...for-revisions/

What will be the revised 2nd Qtr. growth rate AFTER the November elections?

[acptulsa]

Numbers are always preliminary when first announced. They make revisions as more complete data comes in- sometimes the revisions are higher, sometimes lower. First quarter revisions were sharply lower. This should be the final revision of second quarter numbers. The following article is from July:

No, one more revision will sneak into town. The actual, crunched numbers will eventually be prepared. And they might even be crunched correctly.

Of course, no one will notice, because that actual news won't fit the agenda, and the media will bump it in favor of preliminary estimates that thirty million people will be employed over the course of the fourth quarter because Christmas Debt is Good.

[Zippyjuan]

What will be the revised 2nd Qtr. growth rate AFTER the November elections?

There won't be another second quarter revision after the November Elections- aside from the annual summary. The focus will be on third quarter numbers.

Interesting that the third quarter numbers are "faked" while first quarter numbers (which showed a 2% decline) were facts which proved an economic slowdown. Their downward revision was not questioned.

[Ronin Truth]

There won't be another second quarter revision after the November Elections- aside from the annual summary.

What will be the revised 2nd Qtr. growth rate AFTER the November elections?

[acptulsa]

There won't be another second quarter revision after the November Elections- aside from the annual summary.

Your childlike faith that the actual, crunched numbers will vary not one whit from the 'final estimate' is ridiculous and laughable.

And if there is a variance, then that is a revision. Any other use of the english language is laughable.

So thanks for the giggles.

[Zippyjuan]

What will be the revised 2nd Qtr. growth rate AFTER the November elections?

I think something is stuck on your computer. What do YOU think it will be? What do you think it really is?

[oyarde]

This is excellent . I am planning a party to celebrate with all of my new found earnings .

[Liberty74]

How the government calculates GDP is a joke -----> C + G + I + NX = GDP

So this 4.6% growth isn't real except only in terms of Keynesian ideology which has technically gotten America into it's financial mess we are in today. The government manipulates the GDP just like it does the unemployment rate and inflation rate. Don't like the number spit out? Just change out we calculate that number.

It does not matter what the government says because the recent propping up of the banks, printing trillions, borrowing trillions, spending trillions was only a temp fix to a very serious systematic problem nonetheless caused by...you guessed it...big business being in bed with the government and government being in bed with the business - corporate fascism with a dose of socialism. We technically came out of the recession cough cough if you work for the banking system and Wall Street. The rest of you and I are still stuck in the great recession. About every 7 years there is a recession - lately caused by boom and busts via the illegal banking cartel called the FED. There are bubbles every where today - bonds, student loans, housing in CA yet again, etc. One bubble might pop or more. The world wide derivative market is some crazy $#@! like $700 TRILLION. This great recession we are in will be much worse than the 2008 crash when it all goes belly up.

[Origanalist]

This is excellent . I am planning a party to celebrate with all of my new found earnings .

WOO! HOO! Party time!

[NorthCarolinaLiberty]

Our growth rate has been declining for 50+ years, but somebody points to a three month blip.

[oyarde]

I certainly worked more than 5 % harder in 2013 and 2014 than 2012.

[CaptUSA]

Mandatory outlays. Even though that isn't considered "government spending", it has the same effect. You are making businesses pay what amounts to a tax. That new tax pushes new money into the GDP and they consider it growth. Wow.

[Danke]

http://www.ft.com/intl/cms/s/0/4df99...#axzz3Ei8FIeAF

A “poisonous combination” of record debt and slowing growth suggest the global economy could be heading for another crisis, a hard-hitting report will warn on Monday.

The 16th annual Geneva Report, commissioned by the International Centre for Monetary and Banking Studies and written by a panel of senior economists including three former senior central bankers, predicts interest rates across the world will have to stay low for a “very, very long” time to enable households, companies and governments to service their debts and avoid another crash.

The warning, before the International Monetary Fund’s annual meeting in Washington next week, comes amid growing concern that a weakening global recovery is coinciding with the possibility that the US Federal Reserve will begin to raise interest rates within a year.

One of the Geneva Report’s main contributions is to document the continued rise of debt at a time when most talk is about how the global economy is deleveraging, reducing the burden of debts.

Although the burden of financial sector debt has fallen, particularly in the US, and household debts have stopped rising as a share of income in advanced economies, the report documents the continued rapid rise of public sector debt in rich countries and private debt in emerging markets, especially China.

It warns of a “poisonous combination of high and rising global debt and slowing nominal GDP [gross domestic product], driven by both slowing real growth and falling inflation”.

The total burden of world debt, private and public, has risen from 160 per cent of national income in 2001 to almost 200 per cent after the crisis struck in 2009 and 215 per cent in 2013.


“Contrary to widely held beliefs, the world has not yet begun to delever and the global debt to GDP ratio is still growing, breaking new highs,” the report said.

Luigi Buttiglione, one of the report’s authors and head of global strategy at hedge fund Brevan Howard, said: “Over my career I have seen many so-called miracle economies – Italy in the 1960s, Japan, the Asian tigers, Ireland, Spain and now perhaps China – and they all ended after a build-up of debt.”

Mr Buttiglione explained how, initially, solid reasoning for faster growth encourages borrowing, which helps maintain growth even after the underlying story sours.

The report’s authors expect interest rates to stay lower than market expectations because the rise in debt means that borrowers would be unable to withstand faster rate rises. To prevent an even more rapid build-up in debt if borrowing costs are low, the authors further expect authorities around the world to use more direct measures to curb borrowing.

The report expresses most concern about economies where debts are high and growth has slowed persistently – such as the eurozone periphery in southern Europe and China, where growth rates have fallen from double digits to 7.5 per cent.

Although the authors note that the value of assets has tended to rise alongside the growth of debt, so balance sheets do not look particularly stretched, they worry that asset prices might be subject to a vicious circle in “the next leg of the global leverage crisis” where a reversal of asset prices forces a credit squeeze, putting downward pressure on asset prices.