So as I wrote yesterday “I believe the revised number Friday will be -0.7 percent.” It came in true to form.
The Bureau of Economic Analysis said the Q1 second revision came in at -0.7% annualized on the back of weakening personal consumption and corporate profits sinking 5.9%.
Finally maybe someone will realize that the consumer has left the building. You can not have an economic recovery while screwing whatever is left of the middle class.
Seventy percent of GDP is on their consumption. If the middle class sneezes, the US goes into recession, despite what the Dow Jones and S&P 500 are doing.
And right now the middle class is on the verge of having walking pneumonia.
A growing majority of the middle class is on fixed income as most headed for retirement in the last downturn. So you haven’t paid them a stitch of interest on their savings and the feds have raised their medical costs continually. What are they going to do? Sit this “recovery” out.
The market is not the economy, stupid. That’s directed towards the inhabitants of the Marriner S. Eccles Federal Reserve Board Building.
Although I have said repeatedly that there will be no rate hike this year, I defy Janet Yellen to even murmur the words this year.
Done is the jawboning of the economy bouncing back. Words will not do it. Actions will.
Take your foot off the brake of lending. Let money flow to businesses, not to the banks — who are forced to hoard due to draconian lending regs.
The fear of too much of the $4 trillion hitting the economy and causing runaway inflation must be dashed. We are battling stagflation going to disinflation.
The Fed has few tools to deal with that. Exhibit A is QE2 through QE4.
So we wait a month to get the “final” reading on Q1 — it can be revised up to 5 years from now — to see how low we can go.
I believe it will final out at -1.2% because of export data, which is the data that comes in last. That will take on the excuse of a strong dollar and West Coast dock strike, and not a word on the exiting middle-class consumer.