April 28, 2016

Not News: Study Shows $4 Trillion in Annual GDP Growth Lost to Post-1980 Regs

The editorialists at Investor’s Business Daily have reported on the results of an important study by several George Mason University Mercatus Center economists showing what regulations have cost the economy in economic growth since 1980. The establishment press, which has been singularly uninterested in reporting anything that has to potential to slow the regulatory leviathan down — y’know, because its causes are so noble and righteous — is virtually ignoring the Mercatus study.

IBD tied the study’s findings into the “new normal” nonsense the “mainstream” economics community and most of the business press has been foisting on us since it became obvious about 6-1/2 years ago that the U.S. economy’s post-recession performance would likely be singularly underwhelming. What we’ve seen is the worst growth post-downturn economy by far since World War II.

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1Q16 Gross Domestic Product, Advance Estimate (042816): Annual Rate of +0.5 Percent

Filed under: Economy,Taxes & Government — Tom @ 8:34 am

Predictions:

  • Yahoo’s Economic Calendar has +0.6 percent for Briefing.com and +0.9 percent for “Markets.”
  • The Atlanta Fed moved up to +0.6 percent at the last minute yesterday, supposedly justified on the flash international trade report.
  • Moody’s high frequency model moved up to +0.5 percent at the last minute yesterday, with the same argument. (Moody’s spent 11 days at -0.1 without narrative explanation from April 15 to April 25.

I could not find a prediction at the Associated Press.

The release is here (full text report):

Real gross domestic product — the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes — increased at an annual rate of 0.5 percent in the first quarter of 2016, according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 1.4 percent.

The Bureau emphasized that the first-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3 and “Comparisons of Revisions to GDP” on page 4). The “second” estimate for the first quarter, based on more complete data, will be released on May 27, 2016.

The increase in real GDP in the first quarter reflected positive contributions from personal consumption expenditures (PCE), residential fixed investment, and state and local government spending that were partly offset by negative contributions from nonresidential fixed investment, private inventory investment, exports, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in the first quarter reflected a larger decrease in nonresidential fixed investment, a deceleration in PCE, a downturn in federal government spending, an upturn in imports, and larger decreases in private inventory investment and in exports that were partly offset by an upturn in state and local government spending and an acceleration in residential fixed investment.

I’ll have components posted shortly.

UPDATE: Here’s the components breakdown —

GDPcomponentsThru1Q16at042816

Reactions:

  • Consumer spending on goods hit a wall.
  • The contribution to GDP of “Housing and Utilities” services (+0.26 points, part of “other” above) is hard to square with the mild winter and the Fed’s reported 1.5 percent combined first quarter decline in utilities production. The offset would be that rents went up substantially, which wouldn’t point to increasing living standards.
  • The fixed nonresidential investment decrement of -0.76 points is awful, and is likely about the worst we’ve seen since the recession officially ended in mid-2009. Update: Yep, it IS the worst figure since 2Q09, i.e., during the recession. Also, the positive 0.05-point contribution in computers and peripheral equipment is hard to square with the steep first-quarter PC sales declines reported elsehwhere.
  • The residential fixed investment contribution of +0.49 is hard to take, given the mediocre first-quarter results in starts, new-home sales and existing-home sales.
  • The net exports/imports decrement of -0.33 points is less negative than the -0.45 points the Atlanta Fed predicted it would be.
  • The inventory change decrement of -0.33 points is less negative than the 0.5 points Moody’s had been touting in previous narratives, though the actual annualized increase the government reported of $60.9 billion is very close to the $57 billion Moody’s predicted yesterday. But there have been plenty of reports telling us that inventories have been declining, so it’s hard to make sense of the inventory decrement being so low.

Overall, the points above argue for a gradual takedown on GDP in subsequent revisions to near zero. But we had similar situations in last quarter’s advance releases, and subsequent revisions went up, so who know any more?

April 27, 2016

John Bolton: Obama Has Iran ‘On a Highway to Nuclear Weapons’

On Fox News shortly after Republican presidential candidate Donald Trump’s foreign policy speech today, former United Nations Ambassador John Bolton evaluated what the GOP frontrunner had to say about Iran’s efforts to develop nuclear weapons.

He also stated the inconvenient truth about the Obama administration’s nuclear “deal” with Iran, namely that it puts the jihad-driven, terrorist-funding, death-to-America nation “on a highway to nuclear weapons” — a reality that the Barack Obama-defending press simply won’t admit, at least partially because elements of the press, particularly alleged “journalists” at the Associated Press, helped clear the route for that highway:

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AP Story on Calif. Anti-Trump Violence Explains Why So Few Trust the Media

An April 17 Associated Press story reported that “Just 6 percent of people say they have a lot of confidence in the media.” AP writers Carole Feldman and Emily Swanson complained that “perceptions of inaccuracy and bias, fueled in part by Americans’ skepticism about what they read on social media.”

In a later paragraph, they confessed that “The poll shows that accuracy clearly is the most important component of trust.” This is where the AP and the establishment press contantly fails their readers, listeners and viewers. As seem after the jump, an unbylined Wednesday morning AP report quite obviously and deliberately waited four paragraphs to reveal who did the pepper-spaying at a council meeting in Anaheim, California where the subject was Donald Trump.

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Bloomberg Editor, As ‘Microscopic’ GDP Growth Looms: Lower Your Expectations

Just in time for tomorrow’s first-quarter economic growth announcement from the government, Bloomberg Businessweek’s Economics Editor is telling readers: “Don’t Sweat America’s Upcoming Microscopic GDP Growth.”

Besides, Peter Coy writes, people need to get used to the supposedly inescapable fact that “Normal growth for the U.S. economy is just a lot lower than it used to be.” Americans shouldn’t worry, even if tomorrow’s GDP figure shows a small contraction (perhaps indicating that Mr. Coy has been tipped to the fact that it will be). The key, the glib Mr. Coy contends, is to understand that “Happiness is all a matter of lowering expectations.”

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April 26, 2016

Not News: Hillary Fights Off Sanders by Promising to ‘Go Further’ (Left) Than Obama

Search for “go further” and “Hillary Clinton” for recent news on the Democratic Party’s frontrunner, and you won’t find much establishment press coverage.

This is disappointing but not unexpected. The establishment press continues to run interference for her, and reporting that Mrs. Clinton will “go further” (to the left, of course) on a number of issues than Barack Obama has while he has been President would not help her in the general election. But it seems to have helped build a bit of distance between herself and Vermont Senator Bernie Sanders with Democratic Party primary voters. Sanders has given her far more trouble than anyone expected when he entered the race last year, and who has clearly gotten under Team Clinton’s skin. If a Republican or conservative presidential candidate said that he or she would “go further” on hot-button issues, the press would spend days reporting on how “radical” he or she had become.

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Tuesday’s Primaries: Here’s the Mostly Accurate Headline

Filed under: Taxes & Government — Tom @ 10:40 pm

Only Slight Exaggerations: “Trump Crushes Competition in Five State Sweep – Hillary Can’t Shake Sanders, Barely Clinging to Frontrunner Status”

Summarizing the Dem side:
- Clinton wins by ~2 points in CT
- Clinton wins by ~13 points in PA
- Clinton wins by ~31 points in MD
- Clinton wins by ~21 points in DE
- Sanders wins by ~12 points in RI

Hillary Clinton has not closed the deal. She is the frontrunner, more than “barely,” but not by that much — and if the other shoe drops on her lawbreaking problems, Sanders can still win.

Trump’s wins (Trump-Kasich-Cruz):
- 64-24-10 in RI
- 61-20-16 in DE
- 55-22-19 in MD
- 57-19-22 in PA
- 58-28-12 in CT

AP Treats Awful Durable Goods News As a ‘Rebound’

Today’s stories at the business wires covering this morning’s disastrous durable goods report from the Census Bureau ranged from good to absolutely horrid. March orders only increased by a seasonally adjusted 0.8 percent, less than half of the 1.7 percent to 2.0 percent increase that was expected. Additionally, February’s originally reported decline of 2.8 percent was revised down to -3.1 percent.

Victoria Stilwell’s dispatch at Bloomberg News earned a B-minus. Lucia Mutikani’s writeup at Reuters rated a C-minus. As usual, the coverage at the Associated Press, aka the Administration’s Press, delivered by Martin Crutsinger, the nation’s unofficial “Worst Economics Writer,” brought up the rear and earned an “F.”

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March 2016 Durable Goods: Up 0.8 Pct. vs. Expectations of More Than Double; Feb. Goes from -2.8 Pct. to -3.1 Pct.

Filed under: Economy,Taxes & Government — Tom @ 8:29 am

If there’s a reason why the 1Q16 might stay out of the red, it would be better then expected news in this report.

Predictions are for a 1.7 percent – 2.0 percent rise after a 2.8 decline in February, which of course may itself get revised.

The report will be accessible here at 8:30.

HERE IT IS (link) — this is going to hurt the first quarter, and not save it:

New Orders

New orders for manufactured durable goods in March increased $1.8 billion or 0.8 percent to $230.7 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 3.1 percent February decrease. Excluding transportation, new orders decreased 0.2 percent. Excluding defense, new orders decreased 1.0 percent.

Transportation equipment, also up two of the last three months, drove the increase, $2.2 billion or 2.9 percent to $76.0 billion.

Shipments

Shipments of manufactured durable goods in March, down three of the last four months, decreased $1.1 billion or 0.5 percent to $237.0 billion. This followed a 1.0 percent February decrease.

Transportation equipment, also down three of the last four months, drove the decrease, $1.4 billion or 1.8 percent to $77.5 billion.

Inventories

Inventories of manufactured durable goods in March, up following two consecutive monthly decreases, increased less than $0.1 billion or virtually unchanged to $394.1 billion. This followed a 0.3 percent February decrease.

Ex-transportation orders, expected to come in at between +0.5 percent and 0.7 percent, instead fell by 0.2 percent.

There’s virtually nothing to like here. Orders are down; sales are down. Inventories aren’t falling to match the declines. These are durable goods, so gas prices don’t come into play when excusing the declines.

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UPDATE: Zero Hedge

Core Durables Goods Orders fell YoY for the 14th consecutive month – a streak never seen in 60 years outside of a broad US recession.

… Most notably, New Orders for defense aircraft and parts surged 65.7% to $6.1 billion – So not even war can keep the US economy afloat any more!!

… nondefense capital goods ex aircraft was unchanged for the month, and printed a 2.4% decline from a year ago. This too represents 14 consecutive months of (year over year) core capex declines, something else that has never happened outside of a recession.

Perhaps these streaks mean that we’re already in a “broad US recession” — whether or not the government statisticians admit it on Thursday.

April 25, 2016

AP’s Matt Lee Outraged as State Dept.’s Kirby Claims More U.S. Troops in Syria Aren’t ‘Boots on the Ground’

State Department spokesman John Kirby did a fist-pounding imitation of Baghdad Bob at a press conference today on the Obama administration’s decision “to send 250 more troops to Syria.”

Note that the Associated Press report by Kathleen Hennessey linked in the first paragraph refers to “troops,” not “advisers” or “trainers.” This is important, because that AP report acknowledges that in everyday parlance, the additional forces involved are “boots on the ground.” The AP’s Matt Lee, one of the few genuine journalists at the wire service, had to endure hearing Kirby say that the administration wasn’t changing course. Lee didn’t take it well, nor should he have (HT Washington Free Beacon):

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Obama Takes Credit For ‘Saving the World Economy From a Great Depression’

If what Barack Obama contended in London, England on Saturday was obviously true, I suspect that the establishment press would be broadly proclaiming it and looking back at the President’s wonderful work.

What Obama is claiming — that his presidency is responsible for “saving the world economy from a Great Depression” — is nonsense, but he’s clearly beginning to lobby for it to become the historical narrative. This may explain why the Associated Press, while running a story on what Obama said, has made it pretty difficult to find. But it will be there for agenda-driven hacks to locate when it becomes time to spin the history.

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March 2016 New Home Sales: 511K; Jan. and Feb. Revised up by a Combined 26K

Filed under: Economy,Taxes & Government — Tom @ 9:57 am

Today’s only significant data point is new home sales for March.

Predictions are for a seasonally adjusted annual rate of between 518,000 and 521,000.

The report will be accessible here at 10:00 a.m.

HERE IT IS: Relatively decent news (but, as seen in the update below, the trend isn’t srong) —

NEW RESIDENTIAL SALES IN MARCH 2016

Sales of new single-family houses in March 2016 were at a seasonally adjusted annual rate of 511,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 1.5 percent (±15.0%)* below the revised February rate of 519,000, but is 5.4 percent (±16.0%)* above the March 2015 estimate of 485,000.

The median sales price of new houses sold in March 2016 was $288,000; the average sales price was $356,200.

February’s new figure is a 7K upward revision. January was revised up by 19K from 502K to 521K, while December was written down by 3K to 537K. That’s a net pickup of 23K overall, with +26K affecting first quarter (+19K if you factor in today’s -7K performance against the low end of consensus expectations).

The GDP model crunchers may be able to justify a 0.1 percent upward revision to first-quarter GDP based on today’s data, and certainly no more than that. We’ll be watching what Moody’s does, given that its commentary has been silent since April 14, and that every day since then (six business days in all) has shown a predicted contraction of 0.1 percent.

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UPDATE, 3:05 P.M.: Zero Hedge points out that today’s annual-rate figure was the third monthly drop in a row. Additionally, as seen here, the revised 1Q16 total of 1,561K is identical to last year.

Additionally, as seen here, actual, not seasonally adjusted 1Q16 sales of 132K were only slightly higher than the 130K seen in 1Q15. 4Q15 (113K) was 9 percent higher than 4Q14 (104K).

So the trend is one of deceleration for sure, but still with a tiny bit of growth. But the trend, if continued, will start showing year-over-year declines in the second quarter.

April 24, 2016

DNC Chair: Hillary Has Provided the Most Transparency … ‘Other Than the Private Server’

In a Fox News Sunday interview so painful to watch readers are advised to consider taking headache medicine before viewing, Democratic National Committee Chair Debbie Wasserman Schultz tried to make the case that the FBI investigation into Hillary Clinton’s handling of emails containing sensitive and classified national security information and her use of an undisclosed private email server is a “distraction,” and that the idea of even raising it as a campaign issue is “ludicrous.”

Show host Chris Wallace was particularly perturbed when the DNC chair claimed that Mrs. Clinton was “using private e-mail in the same way that previous secretaries of state have,” and forced her to admit: “Other than the private server.”

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On Meet the Press, Sanders Questions Why Cigarettes Remain Legal

On Meet the Press today, host Chuck Todd asked Democratic presidential candidate Bernie Sanders what he thought of the idea of a consumption tax on soda. Sanders’ answer, laded with his standard “massive wealthy inequality” argument, led Todd to believe that Sanders might also be against cigarette taxes.

No, those taxes are fine, Sanders said, but given that “cigarettes are causing cancer … and other diseases … there’s almost a question as to why it remains a legal product.”

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Zeke Emanuel Obamacare Fantasies: Risk Corridors Aren’t Subsidies, and Medicare Is ‘Insurance’

Filed under: Health Care,Taxes & Government — Tom @ 4:06 pm

Things must be getting grim on the Obamacare front if the Obama administration feels it must send “Zeke the Bleak” Emanuel out to defend it.

Though he was on relatively good behavior compared to previous interviews he has given, Emanuel, rather than visibly losing his cool, kept on using Stuart Varney’s first name in his responses during a Fox Business interview this week to the point where it nearly came off as an attempt at parent-child condescension.

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