As we have noted many times, the hundreds of ‘Ivy League’ economists under the umbrella of the Federal Reserve aren’t worth a lick of salt when it comes to forecasting, or creating monetary policies based on real economic numbers. This is because they are more ideological (Keynesian) and political than the supposed ‘neutrality’ stance they try to covey, and as such they follow in lockstep with the government’s narrative on economic reporting.
At the beginning of the first quarter of 2017 the Atlanta Fed announced their GDP forecast and set the bar at around 3.4% growth, and ironically this should have been an immediate red flag since GDP annually has not once touched 3% anytime in the entire prior decade. And like the way political polling tends to become much more accurate the closer it gets to an election, the same can be said about the Federal Reserve as their latest GDP estimate for the first quarter has now been downgraded to just .6%.
Remember when the Fed was “data dependent”? Well, if the Atlanta Fed is right, Janet Yellen will have hiked the Fed’s interest rate in a quarter in which GDP has grown by a paltry 0.6%, down from 1.2% as of its latest estimate. If confirmed, this would be the lowest quarterly GDP growth in three years, since Q1 of 2014.
Incidentally, just over two months ago, the same forecast stood at 3.4%, it has since fallen by over 80%.
From the source:
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 0.6 percent on April 7, down from 1.2 percent on April 4. The forecast for first-quarter real GDP growth fell 0.4 percentage points after the light vehicle sales release from the U.S. Bureau of Economic Analysis and the ISM Non-Manufacturing Report On Business from the Institute for Supply Management on Wednesday and 0.2 percentage points after the employment release from the U.S. Bureau of Labor Statistics and the wholesale trade release from the U.S. Census Bureau this morning. Since April 4, the forecasts for first-quarter real consumer spending growth and real nonresidential equipment investment growth have fallen from 1.2 percent and 9.7 percent to 0.6 percent and 5.6 percent, respectively.
Sadly, the new normal in all economic and financial reporting is to set the bar low, knowing that that any ‘beat’ of the estimates can be spun to show ‘economic recovery’, or in the case of corporate earnings, positive financial growth. And since 75% of all trades are done with computer algorithms rather than from individual traders, all one has to do is manipulate the data since historical trends are meaningless in today’s financial world.
The fact of the matter is, it doesn’t matter what the Fed or the BEA eventually report the GDP number to be, as the real data compiled at Shadowstats shows that except for one individual quarter, GDP growth has been negative going back to 2000 and the crashing of the Dot Com bubble. And in the end it is entirely meaningless because as long as the stock markets are doing well, then the illusion of a good economy is all that the Fed and the government requires to keep their ponzi schemes going.
Kenneth Schortgen Jr is a writer for The Daily Economist, Secretsofthefed.com, Roguemoney.net, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.