June 4, 2014

Trifecta: 1Q Productivity Decline Worsens in Revision, April Trade Deficit Expands, ADP Disappoints (Update: The 2Q GDP Estimate Writedowns Begin)

Filed under: Economy,Taxes & Government — Tom @ 9:15 am

Zero Hedge: “Q1 Productivity Misses; Plunges By Most In 6 Years” (government’s report is here) —

Nonfarm productivity in the frost-bitten US in Q1 plunged at its fastest pace since Q1 2008, with a 3.2% drop … Unit labor costs soared 5.7% – the most since Q4 2012.

Also at Zero Hedge: “Trade Deficit Soars To 2 Year High, To Slam Lofty Q2 GDP Expectations”

The Census Bureau’s language:

The U.S. monthly international trade deficit increased in April 2014 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit increased from $44.2 billion in March (revised) to $47.2 billion in April as exports decreased and imports increased. The previously published March deficit was $40.4 billion. The goods deficit increased $3.3 billion from March to $65.8 billion in April; the services surplus increased $0.2 billion from March to $18.6 billion in April.

The 10 percent worsening of March from $40.2 billion to $44.2 billion would seem to indicate that any final revision to first-quarter GDP will go further into contraction.

ADP’s private-sector payroll increase in April of 179,000 is worse than both terrible-weather February (198K) and pretty bad-weather March (215K).

And all of this this is supposed to lead to a 4% reading for 2nd quarter GDP?

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UPDATE, 10:00 a.m.: At Zero Hedge, a quick answer to my question — “Goldman, BofA, Credit Suisse All Cut Q2 GDP Forecasts By 0.5% On Average.”:

Bank of America … cut its Q2 GDP forecast by 0.5% to 3.6% … Credit Suisse … by 1 whopping percentage point to 3.0%, and now heeeeere’s Goldman, which cuts not only its Q2 GDP forecast to 3.4% from 3.8%, but also the already abysmal Q1 GDP to worse than -1%.

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2 Comments

  1. [...] but probably doesn’t do anything to alter the second-quarter GDP estimate write-downs noted here. Comments [moderated] [...]

    Pingback by BizzyBlog — June 4, 2014 @ 10:13 am

  2. [...] press is still ignoring the GDP-related impact of March’s deeper than originally reported trade imbalance and steep revision to [...]

    Pingback by BizzyBlog — June 9, 2014 @ 5:03 pm

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