BAD NEWS GETS WORSE FOR U.S. ECONOMY …
Last week the news about the U.S. economy was bad … this week it got downright terrible.
After watching first quarter gross domestic product (GDP) growth estimates slide from 2.7 percent all the way down to 1.4 percent last week, the latest estimate from the Atlanta Federal Reserve bank for the current quarter clocked in at an anemic 0.6 percent.
For those of you keeping score at home, that’s less than one quarter the level of economic growth originally projected. If the estimate holds, it would mark the lowest quarterly GDP growth since the first quarter of last year … when unseasonably cold weather was blamed (erroneously) for the dip.
If it slips even lower, we would be looking at the worst quarterly performance since a contraction in the first quarter of 2014.
What’s responsible for the decline?
“The forecast for first-quarter real consumer spending growth fell from 2.5 percent to 1.8 percent,” according to the bank.
There was also a big drop-off in net exports – which is another reason to oppose the crony capitalist trade deal being pushed by U.S. president Barack Obama and several “Republican” leaders in Washington, D.C.
Making matters worse? There’s a ton of inventory liquidation yet to occur. And the “driver” of the anemic growth we are currently witnessing is … wait for it … new health care spending (a.k.a. new Obamacare taxes).
Yeah …
Again, we don’t want to be pessimists. We really don’t. We’d love to come to you with good numbers … the result of a government that understood its proper place in the free market.
But we don’t have that government … we have the federal government of the United States of America, which remains committed to the perpetual incentivizing of dependency, status quo deficit spending, crony capitalism (a.k.a corporate welfare), invasive bureaucracy, reckless global interventionism, open borders and more secretive central bank “stimuli.”
As long as those policies remain in place, expect to see sustained sluggishness … perhaps even another recession.
14 comments
“We’d love to come to you with good numbers …”
Paging Bible Thumper!
I responded ar the top of the thread.
Well why is the stock market up?
Interest rates.
Of course that didn’t take into account today’s housing numbers. Pending Home Sales surge!!!!
Did you notice how Fitsnews writes that the previous two worst quarters were also 1st quarters?
For two years in a row the first quarter has been the worst quarter and the second quarter has been the best quarter. It may be that with Obamacare, people are less sure about their expenses and tax liability, but there is the bounce in the second quarter. 0.6% would match last year’s 1qtr and beat the prior year.
https://www.bea.gov/newsreleases/national/gdp/gdp_glance.htm
Net Exports are down?
Increase in the trade deficit is a counter cyclical.
Just like when the stock market goes down because good economic news might mean a Fed rate hike, Trade data is often the same. Fact is the both imports and exports rose last month. That means more economic activity, which is good news, even though the imports rose more than the exports. Read link for yourself and there are others that report the trade data as good news.
http://www.economiccalendar.com/2016/03/28/us-goods-trade-balance-exports-stabilise-at-low-levels/
Well it don’t fit the Fits man.
Meanwhile, housing sales are up?
“Housing Bubble II or Sub-Prime Borrowers Come Back For More”
The Fed’s most recent Senior Loan Officer Survey shows prime mortgage
borrowers are having an easier time getting “mortgage-approved”.
18% of banks reported an easing of mortgage loan standards last
quarter. Just three percent declared a tightening. It’s clearly getting
easier to get “mortgage-approved”.
Ellie Mae statistics back this up.
According to the mortgage processing software provider Ellie Mae,
whose software handles more than 3.7 million mortgage transactions
annually, more than 7-in-10 purchase mortgage applications made it to
closing last quarter.
This is the highest percentage since Ellie Mae began tracking such data.
http://themortgagereports.com/18963/federal-reserve-senior-loan-officer-survey-mortgage-rates-q4-2015
…just in time for interest rate increases after the election. Interest-only mortgage anyone?
http://www.cnbc.com/2015/07/20/interest-only-mortgages-theyre-baaack.html
Don’t get too excited. People’s credit scores are improving from the recession. FNMA has not changed their standards. Still need 620 on an 80% LTV loan, MI companies still require 760 or better for an 80% LTV or higher. And, still need six to 12 months reserves.
Fits, you pretty much summarized why the numbers are low in your next to last paragraph.
The ill effects created, and continue to be created by our Federal government are pervasive throughout our economy.
I don’t understand how We the People keep electing the same career politicians that think they know how to run the economy with rules and regulations…all the while giving us a National Debt over 19 Trillion Dollars that is ever rising.
Because the only person still running who isn’t a career politician is Donald Trump, who may actually be worse than any of the career politicians running.
I said “keep electing”, it’s been going on for a long time. Donald Trump may actually *not* be worse than any of the career politicians running but it’s obvious many of you will keep electing the career politicians.
That’s a good point, he is not of the “career” politicians that got us in this mess. I think that is his appeal, he is not of the “establishment” and people are quickly tiring of people that are running this country.