Economy in freefall? 1Q revision shows shrinkage of 2.9%

I've been hearing the same story all year from business owners. People are simply not out spending.

There's been a bump in economic activity due to the world cup, but that'll die out, and then where are we left?

I thought we still had another year or two before the next depression. Maybe that was incorrect thinking.

The Left Wing/Progressive news outlets are waiting for the chain-mail instructions on how to blame Republicans for the economic mess the Democrats have created.

I think they're scared.

a reply to: Euphem

No, it's because the Fed keeps printing money to make up for what the government spends over and above what they take in. And as a result, everything you and I get paid is devalued because that printed money is backed by nothing of worth.

a reply to: xuenchen

The Republicans are to blame! Both parties have created this mess. Bush was an economic disaster. Clinton was, Bush II was and now Obongo is. Hilary Clinton will be. Romney would have been as well. There is not one politician worth his salt in economic influence or understanding moreover solutions. They all are clueless. To right this economic ship we need innovated thinking, drastic change. And with those comes a very painful correction that will affect everyone from the welfare pigs to the wallstreet pigs.

Here im CA there is a guy running for governor. He's a throw back to the bankers through and through. Just another big corporate Republican. He voted for and helped implement TARP. But everyone thinks he has bright now ideas and will bring change to CA. Yeah right! He's a joke!

a reply to: butcherguy

Whereas the impact of this last winter would have had a decided effect on the GDP, I think that it only worsened an existing issue and that is, a larger portion of the population (middle class and lower) have tightened their belts. That shift from 3.1 to 1% in consumer spending is really very important as the time period should've been a time where post-Christmas sales (and gift cards) should've given consumer spending a little bump. Small businesses, at least in my area, have been failing, which only further compounds the economic issues in the country as small businesses are the largest employer. Toss in issues with gentrification and it's basically creating a climate where in-house economics are catering more to the affluent because they have the money to spend. All that is going to impact the economy severely outside of the weather.

So no, it isn't good. When I first started seeing news reports repeatedly suggesting that people simply tighten their belts in response to the financial crisis of 2007/8, I was truly stunned. What leads a country out of recession is spending--not belt tightening--and more should've been done to encourage it. Instead, those news agencies basically said "suck it up, buttercup" and here we are in the Great Recession still where shopping malls and iconic department stores are dying. And those businesses hanging onto their pennies and not expanding that Fox mentions? They were doing that between 2008 and 2011. Many of the financial reports from that time period basically consisted of downsizing, increasing efficiency (divestments) and holding onto their nest eggs for several years.

Is it a free fall? No, I don't think so. I'd say it's a slow descent into economic hell that I don't like thinking about much because I can't see it getting any better between AI, automation, and outsourcing. Many within this country are going to be rendered obsolete and, considering the prevailing attitudes at this time, I sincerely doubt that help will be on its way.

And for the love of god, I hope to hell that I am wrong.

a reply to: butcherguy

"The "Man" is keeping me down" !!!!

He comes into my bedroom every morning and physically prevents me from going out and looking for a job.

True story!

lol

a reply to: WhiteAlice

Add to the tightening of the belts the ever increasing taxation and you have less and less disposable income and hence, fewer dollars circulating in the private sector. Fewer dollars being spent means increasing inventories with result in fewer factory orders. Hey! Maybe we are trying to hurt the Chinese economy!!!

Meanwhile, the govt biz is quite good! *cough cough* Monopoly.


lol

What's needed is for the business environment to stabilize. Taxes, regulation and government "help" of all sorts needs to just ... stop so that planners can count on a stable situation. Right now they don't have that so they sit on their cash and wait because if they don't have it, something hideously expensive might come along and they might not have that cash. They're in survival mode the same way everyone else is.

a reply to: ketsuko

It's pretty much a given that the govt, beyond basic infrastructure, cannot "help" the economy. They can merely hurt it less.

a reply to: bbracken677

Back in 2010, I think it was, Chinese factories were beginning to outsource jobs to Africa so they've been downsizing themselves. The part of the public sector that has maintained a pretty steady bustle has been the Department of Defense though they faced some budget cuts last year as well and several segments of that have been privatized at this point. So even the public sector is also the private sector. As far as taxation increasing, I'd say that we're still paying less tax than we were in the 50's. Just because some of the Bush tax cuts were repealed, a lot of other changes in taxation (loopholes/credits/differential taxation on qualified dividends/etc) have still lowered taxes overall from that time period. Still when people are living check to check, any taxation can feel like too much.

a reply to: butcherguy

America's economy shrank at a drastic 2.9 percent annual rate in the first quarter, a far more alarming picture than ones painted in two previous government estimates -- including one that actually claimed modest growth.

The new figure released Wednesday by the Commerce Department is nearly three times lower than last month's preliminary estimate of 1 percent shrinkage -- at the time the worst three-month performance since 2009 --

and far greater than the 0.1 percent growth estimate in April.

Easy to see how they present a great outlook initially, and then "revise" down later after the average person already believes the original reports.

Perfect psyops in play.

They keep getting away with it too.

My guess would be that whole global warming thing during the first quarter kept everybody indoors out of the hot weather. But what do I know about weather anyway.

originally posted by: WhiteAlice
a reply to: bbracken677

Back in 2010, I think it was, Chinese factories were beginning to outsource jobs to Africa so they've been downsizing themselves. The part of the public sector that has maintained a pretty steady bustle has been the Department of Defense though they faced some budget cuts last year as well and several segments of that have been privatized at this point. So even the public sector is also the private sector. As far as taxation increasing, I'd say that we're still paying less tax than we were in the 50's. Just because some of the Bush tax cuts were repealed, a lot of other changes in taxation (loopholes/credits/differential taxation on qualified dividends/etc) have still lowered taxes overall from that time period. Still when people are living check to check, any taxation can feel like too much.

You can't really compare the '50s to today. For starters, the business regulatory climate was a lot less, so it was standard practice and very easy for the wealthy to shelter their assets by re-investing which is what fueled the economic boomtimes of that decade. These days, the regulatory environment is punative and far more expensive and shifting radically from year to year.

Also, most of the rest of the world was still recovering or not yet developed. So businesses did not have an easy avenue of escape to get away from the taxation. We were the only really industrialized country to escape the ravages of WWII. Everywhere else had to rebuild or were not yet established manufacturing powers.

a reply to: WhiteAlice

Yes...huge difference in the economy of the 50s and 60s that could support such stupid taxation.

1). Positive trade balance. Wealth coming into the country instead of leaving it
2). Manufacturing jobs: The US manufactured 25% of the world's manufactured goods (Today..meh: 5%?)
3). Private sector debt, personal debt and public debt. All significantly lower. People actually had savings accounts!.
4). I wasn't about to retire....
5). Politicians were not so creative in finding new ways to tax us back then. Even though income tax rates are lower, virtually every OTHER tax is higher now. Stealth taxes.
6). The baddest stealth tax of all was not killing us (inflation)

originally posted by: bbracken677
a reply to: WhiteAlice

Add to the tightening of the belts the ever increasing taxation and you have less and less disposable income and hence, fewer dollars circulating in the private sector. Fewer dollars being spent means increasing inventories with result in fewer factory orders. Hey! Maybe we are trying to hurt the Chinese economy!!!

Meanwhile, the govt biz is quite good! *cough cough* Monopoly.


lol

The best economy we ever had, had a top marginal rate of 90%.

dollar - economy...

this radio show is just starting:

Steve Quayle & V The Guerrilla Economist on The Hagmann & Hagmann Report

www.blogtalkradio.com...


it started at 8pm eastern (15 min ago...get the next 2 1/2 hours streaming

a reply to: St Udio

I tried listening but he went on a rant about crybabies and feminazi's and needing to hoard everything you have to protect yourself from ISIS. Then he said it's because people aren't worshiping God enough.

This guy is a lunatic.

originally posted by: bbracken677
a reply to: WhiteAlice

Yes...huge difference in the economy of the 50s and 60s that could support such stupid taxation.

1). Positive trade balance. Wealth coming into the country instead of leaving it
2). Manufacturing jobs: The US manufactured 25% of the world's manufactured goods (Today..meh: 5%?)
3). Private sector debt, personal debt and public debt. All significantly lower. People actually had savings accounts!.
4). I wasn't about to retire....
5). Politicians were not so creative in finding new ways to tax us back then. Even though income tax rates are lower, virtually every OTHER tax is higher now. Stealth taxes.
6). The baddest stealth tax of all was not killing us (inflation)

Nobody paid the 50`s tax rate and I mean nobody!You could and did write off clothes for work,interest on car payments,interest on credit cards,Med ins,Dr visits,union dues,travel to prof org meetings,expenses for the kids dental work and on and on.

a reply to: Aazadan

As has been pointed out, our boom starting in '44-'45 coincided with most of our serious competitors being destroyed. We also has a suddenly expanded work force as soldiers came home.

But the 94% tax business? Naw, they didn't take that much. Actually, what they took was about 40%. Remember all those three-Martini lunches which could be written off? Try this article.

almostclassical.blogspot.com...

They economy has been moving at a pretty quick pase but, it is going to hit bumps in the road on occsion. However have no fear the second quarter looks to be back on track with a 4% growth.