FedUpUSA

GDP: Chickens Roosting; Don’t Walk Under Them

… or you’re likely to have them take a dump on your head.

That would be a miss….

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.2 percent in the first quarter of 2012 (that is, from the fourth quarter to the first quarter), according to the “advance” estimate released by the Bureau of Economic Analysis.  In the fourth quarter of 2011, real GDP increased 3.0 percent.

Expectations were for 2.5%.  But even that is just about even.  This is in per-capita terms negative.  And the internals are not good either.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 2.4 percent in the first quarter, compared with an increase of 1.1 percent in the fourth. Excluding food and energy prices, the price index for gross domestic purchases increased 2.2 percent in the first quarter, compared with an increase of 1.2 percent in the fourth.

That’s a negative GDP folks when one looks at per-capita and inflation, as opposed to a positive real one last quarter.  This is both bad news and handcuffs The Fed on more QE, as more “easy money” into a negative real GDP print simply makes for a higher number and higher inflation, and thus is self-defeating.

Equipment and software increased 1.7 percent, compared with an increase of 7.5 percent.

Negative in real terms (commercial investment) = bad.

Real federal government consumption expenditures and gross investment decreased 5.6 percent in the first quarter, compared with a decrease of 6.9 percent in the fourth.  National defense decreased 8.1 percent, compared with a decrease of 12.1 percent.  Nondefense decreased 0.6 percent, in contrast to an increase of 4.5 percent.  Real state and local government consumption expenditures and gross investment decreased 1.2 percent, compared with a decrease of 2.2 percent.

“G” is decreasing but deficits are not = very bad.

Real final sales of domestic product — GDP less change in private inventories — increased 1.6 percent in the first quarter, compared with an increase of 1.1 percent in the fourth.

Actual sales, again per-capita adjusted, are not good.

Personal outlays increased $145.9 billion (5.3 percent) in the first quarter, compared with an increase of $86.4 billion (3.1 percent) in the fourth.  Personal saving — disposable personal income less personal outlays — was $466.0 billion in the first quarter, compared with $530.8 billion in the fourth. The personal saving rate — saving as a percentage of disposable personal income — was 3.9 percent in the first quarter, compared with 4.5 percent in the fourth.

Terrible; we are again decreasing capital formation and borrowing forward in an attempt to use our fingernails to keep from falling off the cliff.

Sorry folks but this is a crap report; the market’s reaction was best outlined by the dollar, which took a modest header on the release, indicating that the market thinks The Fed will do more stupid (and counter-productive) things.

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