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Neverwhere

Us Gdp Grows 5% Interest Rates To Rise?

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US growth revised up to 5% (FT so may be behind a paywall) putting pressure on the FED to raise rates in the near future. They've had their HPC and may well be able to cope with sustained rate rises, so as the UK traditionally follows US rates fairly slavishly Carney might actually be good for his word in 2015. Here's hoping...

Edit: clearly the title of this thread should read "US" not "Us"

Edited by Neverwhere

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Great news, so tax receipts are up in the US to meet the increased service costs of the deficit and to reduce the debt mountain?

http://www.npr.org/blogs/thetwo-way/2014/10/15/356428818/u-s-budget-deficit-falls-to-pre-recession-levels

As tax revenues increased and spending cuts took effect, the 2014 budget deficit dropped to the lowest level in six years.

In a statement, the Treasury Department hailed the news by pointing out a few key figures:

— "The deficit in FY 2014 fell to $483 billion, $197 billion less than the FY 2013 deficit and $165 billion less than forecast in President Obama's FY 2015 Budget."

— As a percentage of GDP, the deficit fell to 2.8 percent, "the lowest level since 2007 and less than the average of the last 40 years."

— In terms of dollars, the 2014 deficit is the lowest it has been since 2008.

Great news the deficit falling and is at $483bn in Oct 2014. Just think what the service cost of that will be for the US govt if interest rates go up.

All of those part time jobs are really driving the US forward.

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http://www.zerohedge.com/news/2014-12-23/here-reason-surge-q3-gdp

Back in June, when we were looking at the final Q1 GDP print, we discovered something very surprising: after the BEA had first reported that absent for Obamacare, Q1 GDP would have been negative in its first Q1 GDP report, subsequent GDP prints imploded as a result of what is now believed to be the polar vortex. But the real surprise was that the Obamacare boost was, in the final print, revised massively lower to actually reduce GDP!

This is how the unprecedented trimming of Obamacare's contribution to GDP looked like back then.

Healthcare%20Contribution_0.jpg

Of course, even back then we knew what this means: payback is coming, and all the BEA is looking for is the right quarter in which to insert the "GDP boost". This is what we said verbatim:

Don't worry thought: this is actually great news! Because the brilliant propaganda minds at the Dept of Commerce figured out something banks also realized with the stub "kitchen sink" quarter in November 2008. Namely, since Q1 is a total loss in GDP terms, let's just remove Obamacare spending as a contributor to Q1 GDP and just shove it in Q2.

Stated otherwise, some $40 billion in PCE that was supposed to boost Q1 GDP will now be added to Q2-Q4.
And now, we all await as the US department of truth says, with a straight face,
that in Q2 the US GDP "grew" by over 5%
(no really: you'll see).

Well, we were wrong: it wasn't Q2. It was Q3, albeit precisely in the Q2-Q4 interval we expected.

Fast forward to today when as every pundit is happy to report, the final estimate of Q3 GDP indeed rose by 5% (no really, just as we predicted), with a surge in personal consumption being the main driver of US growth in the June-September quarter. As noted before, between the second revision of the Q3 GDP number and its final print, Personal Consumption increased from 2.2% to 3.2% Q/Q, and ended up contributing 2.21% of the final 4.96% GDP amount, up from 1.51%.

Still it grew at 5% so it must all be good....

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And this is one of the great tasks of leadership for us, as individuals and citizens this year. But even if we act to erase material poverty, there is another greater task, it is to confront the poverty of satisfaction - purpose and dignity - that afflicts us all. Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product - if we judge the United States of America by that - that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children. Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.

RFK.

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http://www.zerohedge.com/news/2014-12-23/exposing-deception-how-us-economy-grew-140-billion-q3-due-data-revisions

So what do all these revisions mean numerically? Luckily we can put absolute numbers alongside the savings rates, and as the following chart show, as of September 30, or the end of Q3, when US GDP supposedly soared by 5% annualized we now know that data revisions of personal income and spending alone generated...

Personal%20Savings%20Dec%20revision_1_0.

... A whopping $140 billion in GDP!

So what does this mean? Well, as we learned earlier US GDP grew in Q3 by a nominal $272 billion to $17.6 trillion. We now know that more than half of this increase came from, drum roll please, data revisions!

In other words, US GDP, using pre-revision data, would have been less than 2.5%. But that woul dhardly lead to the euphoric blow-off top rally we have seen today which sent the DJIA for the first time ever above 18,000, which in turn is so critical to boost consumer confidence so Americans will, in real life, do what the BEA hopes they have already done at least on paper, and that is reduce their savings by a whopping 20% at the end of September, or by some $140 billion, to $593 billion in order to spend, spend, spend.

And the other irony: as the BEA also reported, what did Americans allegedly spend the bulk of their savings on?

Obamacare.

So in short, today the market is euphoric and hitting all time highs because Americans dug into their savings and spent billions on the "Affordable" Care Act.

And that, ladies and gentlemen, is the short answer why the US is "growing" when the rest of the world is mired in a triple (or quadruple if one is Japan) recession.

Still it could be worse.

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Okay, so given GDP is not actually a good measure of economic health and is easily manipulable by TPTB the fact that they are pretending it is accurate/manipulating it up still surely indicates that they are likely to raise rates at least marginally in order to maintain the illusion of GDP growth, no? Of course at that point it might well become clear that the emperor's got no clothes on but if they don't even attempt it then they're as much as pointing this out themselves...

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Okay, so given GDP is not actually a good measure of economic health and is easily manipulable by TPTB the fact that they are pretending it is accurate/manipulating it up still surely indicates that they are likely to raise rates at least marginally in order to maintain the illusion of GDP growth, no? Of course at that point it might well become clear that the emperor's got no clothes on but if they don't even attempt it then they're as much as pointing this out themselves...

I expect another reason to be given why they can't be. My first thought is that rates can't go up until growth has caught up with projections prior to 2007/08 for where growth/GDP should be now.

The new normal is just insanity.

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I expect another reason to be given why they can't be. My first thought is that rates can't go up until growth has caught up with projections prior to 2007/08 for where growth/GDP should be now.

The new normal is just insanity.

The longer they wait to normalize rates the worse it's going to be when they do and at some point this kind of toothless market manipulation is going to lose its efficacy.

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http://www.manhattan-institute.org/html/pgi_04.htm#.VJnOy__jAA

  • Overall U.S. employment has yet to return to its prerecession level, but the number of oil & gas jobs has grown 40 percent since then.
  • In the 10 states at the epicenter of oil & gas growth, overall statewide employment gains have greatly outpaced the national average.
  • A broad array of small and midsize oil & gas companies are propelling record economic and jobs gains—not just in the oil fields but across the economy.
  • America’s hydrocarbon revolution and its associated job creation are almost entirely the result of drilling & production by more than 20,000 small and midsize businesses, not a handful of “Big Oil” companies. In fact, the typical firm in the oil & gas industry employs fewer than 15 people.
  • The shale oil & gas revolution has been the nation’s biggest single creator of solid, middle-class jobs—throughout the economy, from construction to services to information technology.
  • Overall, nearly 1 million Americans work directly in the oil & gas industry, and a total of 10 million jobs are associated with that industry.
  • Oil & gas jobs are widely geographically dispersed and have already had a significant impact in more than a dozen states: 16 states have more than 150,000 jobs directly in the oil & gas sector and hundreds of thousands more jobs due to growth in that sector.
  • In recent years, America’s oil & gas boom has added $300–$400 billion annually to the economy—without this contribution, GDP growth would have been negative and the nation would have continued to be in recession.
  • The resources, technology, infrastructure, and thousands of small and midsize businesses are capable of producing even more growth and many more jobs, so long as policymakers do not obstruct progress in the oil & gas sector.

O dear...

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The longer they wait to normalize rates the worse it's going to be when they do and at some point this kind of toothless market manipulation is going to lose its efficacy.

They have catch 22. Everything is fecked.

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So what does this mean? Well, as we learned earlier US GDP grew in Q3 by a nominal $272 billion to $17.6 trillion. We now know that more than half of this increase came from, drum roll please, data revisions!

Revised data came from data revisions. Zero edge find this surprising (!).

Consumption = dis-saving. Economics 101 (unless you're Zero edge apparently. Or stupid. They truly are the Daily Mail of financial reporting. At least Max Keiser is sufficiently self-aware to know that he's a parody troll)

Dumb leading the dumber

Edited by R K

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As usual the Fed is miles behind the curve. QE3/4 should never have happened, they should have been looking to tighten (and deleverage) in 2013 not loosen. The 1.5-1.75% GDP growth that the US economy maintained in the four years 2009-12 was probably as good as could be expected for the cycle given the extraordinary burden of domestic and international debt carry. By re-loading the boat the Keynesians have brought it back to the point of capsize again. Any attempt by Yellen to normalise rates now risks setting off a cascade of sovereign debt defaults and market sell-offs all around the world.

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As usual the Fed is miles behind the curve. QE3/4 should never have happened, they should have been looking to tighten (and deleverage) in 2013 not loosen. The 1.5-1.75% GDP growth that the US economy maintained in the four years 2009-12 was probably as good as could be expected for the cycle given the extraordinary burden of domestic and international debt carry. By re-loading the boat the Keynesians have brought it back to the point of capsize again. Any attempt by Yellen to normalise rates now risks setting off a cascade of sovereign debt defaults and market sell-offs all around the world.

What Keynesians, I see no Keynesians anywhere. Pseudo Keynesians maybe, but there are no Keynesians.

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As usual the Fed is miles behind the curve. QE3/4 should never have happened, they should have been looking to tighten (and deleverage) in 2013 not loosen. The 1.5-1.75% GDP growth that the US economy maintained in the four years 2009-12 was probably as good as could be expected for the cycle given the extraordinary burden of domestic and international debt carry. By re-loading the boat the Keynesians have brought it back to the point of capsize again. Any attempt by Yellen to normalise rates now risks setting off a cascade of sovereign debt defaults and market sell-offs all around the world.

Bring it on. :lol:I thought the piece on "prepping" last night on Sky was interesting, looks like it is no longer just borderline personalities in the mountains with their guns that think US society/economy isn`t sustainable long term, and that the government won`t cope with big emergencies?

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