Tag Archives: GDP report

Economic Demise Breeds Public Unrest

The Government reported its “advance” estimate of first quarter 2017 GDP today.  The data-monkeys at the Bureau of Economic Analysis (BEA) reported that the economy grew at just 0.7% annualized in Q1.  This is down from the alleged 2.1% annualized growth rate in the fourth quarter of 2016.  It was also 36% below the 1.1% forecast of the average Wall Street monkey economist.

Next to the monthly employment report, the GDP report is subjected to the highest degree of statistical manipulation in order to make the reported reality look better than reality itself.  If the Government was willing to release a report showing a 67% decline in economic growth from Q4 2016 to Q1 2017, imagine how bad the real numbers would show the economy to be.

The report itself, like the employment report, serves no purpose other than as tool for political  goal-seeking and propaganda.   The consumer spending component of the report fell to a .23% annualized growth rate.  It was the worst level of consumer spending since 2009.   If the Government were to apply a realistic GDP deflator (price change index) to its numbers, rather than the 2% used to calculate the final number, consumer spending would have been negative.

Worse, the various Government agencies are reporting inconsistent numbers.  The Census Bureau’s monthly retail sales report showed a .4% gain in retail sales for January followed by .3% and .2% declines in February and March, respectively.  To be sure, retail sales do not encompass the entirety of the “consumer spending” category.  But, with average real disposable income declining, it’s difficult to believe that consumers were spending money on anything other than necessities in Q1.

The problem with the phony economic reports is that eventually the public begins to see and feel the truth.  Fake economic news does not create real economic activity or real jobs. The economic separation between the “haves” and “have nots” has never been wider, both in the size of each cohort and the degree of separation.

When someone who is working two menial part-time jobs to make ends meet and reads that 200k jobs were allegedly created in a given month, that person knows and feels the truth. That person also begins to get angry.    In fact, the general level of anger across the U.S. population is rising at an alarming rate.  When 2x part-time jobber is driving in a high-mileage vehicle in need of repairs next to a brand new Ferrari with “FLIPPER” on the license plate, it foments anger.  When this occurs daily across  the country, it foments civil unrest.

If the economy were producing real growth in employment and wealth, as purported by the Government, not many people would care which person or political party occupies the White House.  In fact, the party in power would get credit.  But the growing political discord among the population is a reflection of a middle and lower class that is rapidly transitioning to lower and poverty  class – and they are getting pissed.   The  stock market bubble, which is another form of  propaganda, is only serving to intensify the anger.

The Shadow of Truth discusses the idea that the increasing civil discord is seeded in a collapsing economy in today’s podcast, along with a brief conversation about developments in the precious metals market:

Click on either banner below to find out more about each publicaton:

The Government’s GDP “Estimate” = “Grotesquely Deceptive Propaganda”

I guess the new policy regarding the presentation of economic data that has been implemented by the Obama Government is, “if you don’t like the results the first time around, make shit up to make it look better the second time.”  After all the media will zero in on the newly fabricated statistics and that will become the Orwellian Truth.  Besides, the public doesn’t care.”

Immediately after the release of the headline GDP report, Reuters released a news report headlined:  “U.S. believes no structural issues in GDP data construction” – LINK.  It’s like symphonic orchestration.  Release a fraudulent economic report and follow it right up with a news report from Reuters which affirms the “validity” of the report, using Government statisticians as the source of information.   And Americans accuse the Chinese and Russians of issuing propaganda based on fraud?

You know something is rigged by the Government when the press release announcing the results contains several paragraphs trying to explain away the revisions.  Of course, most of the key new “metrics” are not defined other than with vague descriptions.   Here’s an example:

A new aggregate, the average of GDP and GDI, is a supplemental measure of U.S. economic activity. In real, or inflation-adjusted, terms this measure increased 0.5 percent in the first quarter of 2015;

The net result it that what was originally reported as a -.2% real decline in GDP in Q1 is now considered to be a .6% gain.  Really?  We know just about every economic metric reported during Q1 reflected a declince in economic activity that took the indices back to 2008-2009 levels.  And yet, according to the Government, real inflation-adjusted GDP increased in Q1.

Part of the trick to this math is that, somehow, the Government determined that prices declined 1.6% (annualized) rate in Q1.  Anyone experience paying lower prices for stuff at any point in the last several years?  I guess if the Government’s price index only includes the price wars going on in the retail industry, then maybe prices of electronics and Michael’s Store widgets dropped in Q1.  The price of everything else increased, in some cases significantly.

The reason the Government wants to present a decline in its GDP deflator is that it has the mathematical affect of converting real GDP into a higher number than nominal GDP.  We already know that the Government’s fraudulent measurement of inflation has the affect overstating nominal GDP.  A negative GDP deflator magnifies this affect:


Now lets look at reality. The two graphs below show factor orders and retail sales during Q1. Manufacturing and consumption – the two primary components of GDP besides Government spending – click to enlarge:


The red line marks the end of 2014. The black circle shows factor orders during Q1. In fact, factory orders have been plunging since since early-mid 2014 back to levels not seen since 2008.


This graph below shows total retail sales expressed in terms of the year over year percentage change. As you can see, retail sales expressed in terms of year over year change was plunging:


How is it at all possible that “real” GDP was magically revised from a negative to positive in Q1 when the two biggest components combined, by far, in calculating GDP were negative?

It’s only possible in the fairytale world of Government propaganda. If you don’t like the results the first time around make shit up to change the result into something you like – GDP = “Grotesquely Deceptive Propaganda.”

Government Economic Reports And “The Big Lie”

Hitler famously lectured in “Mein Kampf” that if a leader is going to fabricate a lie, it needs to be irrationally outrageous in order to make people believe that it would be impossible to make something like that up (9/11 comes to mind…).   From “Mein Kampf:”

It would never come into their heads to fabricate colossal untruths, and they would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation.

That explanation pretty much sums up this morning’s upwardly revised Q2 GDP.   In fact, I woke up this morning thinking that “they” would revise the initial Q2 estimate up rather than down, because everyone who did not believe the first report was anxiously awaiting to see a downward revision.  So, as Hitler adeptly explains, the solution to try and make the initial Q2 GDP report “believable” would be to revise it higher.   Reread the quote above if that does not make sense.  In actuality, it’s basic freshman level psychology…

My co-producer and I posted a new video yesterday exposing another of the Government’s Big Lies.  I invite you to watch it here:   Obama Lies About Employment.  It’s only 9 minutes and has an entertaining  2 minute segment at the end.

Finally, what is not a lie is the fact that my housing market analysis has been as correct as saying the sun will rise in the east, even on a cloudy day.  The homebuilder stocks are down nearly 15% since their peak May 2013.  This is in the context of the S&P 500 moving up over 20% since then.  Imagine how demolished these stocks will get when the SPX rolls over.  In other words, the housing stocks make GREAT short plays.   I have two stock ideas that are in the mid-teens and low 20’s that will fall hard with patience.  One will likely go bankrupt and the other will trade well below $10:   Housing Short Ideas.

Also included in that link are some high rate of return-potential mining stocks, some of them trading under $1.  Stay tuned because I should have a new idea up today.  This one is an imminent producer trading under $1 that offers the potential for lower-risk double or triple.

The Deteriorating Economic Outlook

I wrote an article with Dr. Paul Craig Roberts and John Williams (Shadowstats.com) which details why the negative 2.9% GDP contraction for Q1 as measured by the Government was likely a gross misrepresentation of the real GDP decline which occurred.  We also explain why this will likely lead to a further measure decline in GDP for Q2, despite Wall Street’s interminable optimism in calling for a 3% rise in GDP.   Finally, we explain the implications for real wealth being generated by the economy in relation to the inexorable rise in Government debt:

Years of understatement of inflation has resulted in years of overstatement of GDP growth. Thinking about the many years of misstatement, we realized that the typical computation in nominal terms of the ratio of debt to GDP is seriously misleading.

You can read the article here:  The Deteriorating Economic Outlook

With the economy starting to contract, corporate profits and cash flow will continue to dry up.   This will place the highly overvalued corporate bond at risk for a devastating sell-off.  Corporate bond spreads are the tightest they’ve been to Treasuries since 2007.  Anyone remember what notable credit market event followed 2007?

You need to dump your bond fund investments now.  As in, call you investment advisor or retirement fund administrator and get out.  ASAP.  Don’t put the money into money market funds because they blow up too – see 2008 for reference (they all have derivatives in them).  Move as much money as you can into precious metals and junior mining stocks:  Junior Mining Stock Research Reports.

While every chart and technical analyst under the sun has been screaming that the metals and miners are going to sell-off here, they just keep bouncing back and going higher – climbing that wall of worry…