Thursday morning bright and early the federal government will release its first of two revisions to the second quarter 2014 GDP number.
It will be going down.
My question is – what will be the prevailing list of excuses and apologies from the cheerleader financial media when it comes out at 8:30 am ET?
Last month on its initial, early estimate, the Bureau of Economic Analysis said that second quarter GDP growth was an unbelievable 4%.
And when I use the word “unbelievable” I mean that literally.
That initial estimate came on the heels of the first quarter GDP which came in at -2.1% in the first quarter, which was almost entirely blamed on cold weather in the winter.
The 4% estimate for the second quarter was the magic rebound, they said.
Anyone who has been watching the economy was on the floor laughing, while the mainstream financial media touted it as the “Summer of Recovery 4.0” or whatever version we’re supposed to be on.
Well, today the Congressional Budget Office released its revised estimate of the total 2014 GDP. (hat tip to ZeroHedge.)
The initial estimate was for 3.1% growth. Now the CBO has lowered its projection of real growth of GDP in 2014 from 3.1% to 1.5%.
Click to enlarge.
When the initial BEA second quarter GDP estimate came out at the incredulous level of 4%, more sober market watchers and skeptics urge caution on exuberance
The increase in the BEA’s second quarter GDP estimate primarily reflected positive contributions from personal consumption expenditures (largely driven by credit card purchases), private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
“What is interesting is that the Commerce Department announced that as a result of incomplete June data, the biggest components of the GDP beat, Inventories and Trade, were estimated,” noted ZeroHedge. “In other words, assume that future revisions of Q2 GDP will be lower, not higher, as the actual data comes in, and especially as the CapEx data, which contrary to the GDP report, has not rebounded.”
Historically, average GDP growth since 2009 has been measured at a pace of 2.1%.
Granted, the CBO isn’t exactly the most accurate on their own GDP predictions, but they never err to the low side.
Click to enlarge.
My question is this:
What’s going to be the running excuse meme that is no doubt being manufactured behind closed doors over at the Department of Commerce? Wanna play buzzword bingo with “Cash on the sidelines,” “Escape velocity,” “International tensions” or some nonsense about “Climate change?”
Post your submissions in the replies below.
Bonus: If I’m wrong and the BEA’s first revision isn’t downward by at least half a percentage point, I’ll do that ice bucket challenge with a can of tomato soup.