Q1 GDP Surge?

Friday April 26th BEA Advance Q1 2019 GDP posting at a "robust" +3.2% necessitates much Nattering... Do you think we're buying into the MSM hype?  What drove the 3.2% increase? 

Increases in inventory contributed 0.65 percentage points, while more exports (0.45) and fewer imports (0.58) contributed 1.03 percentage points. Not including these adjustments (which we view as antiquated parts of the calculation that may have been appropriate 80 years ago when our method of calculating GDP was developed, but are no longer relevant in our modern economy), GDP increased by a mere 1.5%. - April Cass Freight Index Report

So forget the headline number....

“On the outside, it looks like a shiny muscle car,” wrote economist Bernard Baumohl of the Economic Outlook Group. “Lift the hood, however, and you see a fragile one cylinder engine."

"First-quarter GDP is 3.2%, but the underlying data is much weaker and is consistent with a slowing economy,” said Jason Furman, former economic adviser for President Obama and a professor at Harvard University.

Behind that great GDP number, the real economy slumped - Marketwatch ...

The graph above "Final Sales to Private Domestic and Investment" shows a NEAR term perspective with a six year drop over a ten year span.  From someone whose opinion we value....

"The heart of the real economy — private-sector consumption and investment — slowed sharply in the first quarter to a 1.3% annual rate, the slowest in nearly six years"

Not so good. May 3rd, the 3rd seasonal inflection point, could also mark a sell off in equities. When you get a preponderance of short-term assets on the front-end of the yield curve, markets are ultimately set up for a free-fall. - Salmo Trutta 26 Apr 2019, 11:12 AM

Upon further review...  the near term graph above can be put into perspective with (Gross private domestic investment: Fixed investment: Nonresidential) added to (Personal consumption expenditures) both as shares of gross domestic product.

Above note:  Major peak to trough = RED lines. Major trough to peak = GREEN lines.

Q282 - Q491 - 38 quarter decline - Reagan (26) + Bush Sr. (12)
Q192 - Q100 - 32 quarter recovery - Bush Sr. (4) + Clinton (28)
Q200 - Q209 - 40 quarter decline - Bush 2
Q309 - Q311 -   8 quarter recovery - Obama
Q411 - Q119 - 29 quarter decline Obama (20) + Trump (9)

The Nattering One notes the trajectory was down in the 1st four quarters of Obama's administration, but we give credit to Bush 2 where it is clearly due. Moving West...  long term since Q1 1982, 107 quarters (73%) DOWN trending vs 40 quarters (27%) UP trending. 

Near term since Q1 2000,  8 quarters (10%) UP trending vs 69 quarters (90%) DOWN trending.  Thus, the graph above paints a much grimmer picture, which leaves much to be desired.  Is this a confirmation that this two legged dog of an emasculated economy is not getting ready to roll over and play dead,  but coded long ago?  We'll let Bones have the last word...



More to come in COTS: The Early Edition? Stay tuned, no flippin.