USA Second Quarter GDP a Lower 1.5%

Bureau of Economic Analysis: Gross Domestic Product

The Bureau of Economic Analysis released the first (advance) estimate of Q2 2012 GDP which was +1.5% quarter over quarter, a decrease from the prior Q1 2012 estimate of +2.0%, and a drop from the previous Q4 2011 of +4.1%. The total GDP reached an all-time high $15.60 trillion annualized. The GDP has increased quarter over quarter for 12 consecutive quarters, since Q3 2009. Growth rates have ranged from a near-recessionary +0.1% in Q1 2011 to a robust +4.1% in Q4 2011.

The Big Question: Where is the USA economy headed? A recession in 2012 does not appear probable (yet), but the USA economy is growing very slowly. Three scenarios are usually discussed: (1) a double dip recession whereby the GDP will turn negative yet again with a higher unemployment rate, (2) the economy will continue "bottom bouncing" with slow to very slow growth and a continuing relatively high unemployment rate, or (3) the bottom is in and GDP growth will accelerate and full employment and is on the horizon.

Scenario (2) with slow to very slow economic growth and a continuing relatively high unemployment rate has been occurring and is the most likely scenario for 2012, with an annual GDP growth projected of approximately +2.0%. The average of the most recent 4 quarters reported by the Bureau of Economic Analysis is +2.23% (+1.3%, +4.1%, +2.0%, +1.5%).



The latest data reflects the regular annual revision of the national income and product accounts, beginning with the estimates for the first quarter of 2009. This revision incorporates source data that are more complete, more detailed, and otherwise more reliable than those previously available. A later post will review these revisions compared to the prior GDP data reported.



There is a more important chapter developing in the Story of America. The annualized GDP is $15+ trillion and the funded national debt has also exceeded $15 trillion. Yes, the USA debt has reached and passed the threshold of a national funded debt that exceeds GDP as the federal budget deficits continue uncontrolled. The funded sovereign debt to GDP ratio has now exceeded 100%.

In the minds of many Americans, the 100% benchmark is usually surpassed by socialist and totalitarian countries as these misguided, financial inept nations implode into chaos and poverty. An updated review of this USA milestone and the upcoming American Day of Reckoning, the result of the fiscal and monetary excesses in our Spendthrift Nation, will be posted soon.

USA Sovereign Debt Exceeds GDP: Spendthrift Nation

USA Sovereign Debt Now Exceeds GDP: Greetings From Big Brother

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Weekly Leading Index: USA Already In Recession?

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ECRI Weekly Leading Index and Annualized Growth Rate

Lakshman Achuthan and the ECRI According to Lakshman Achuthan's interpretation of his economic indicators (the Weekly Leading Index, the Annualized Growth Rate, and other metrics), a USA Recession is here, right now. He initially predicted in September 2011 there would be an eventual economic downturn. He has continued affirming since. Achuthan had said it could take up to a year from December 2011 to prove him correct. The video below is Achuthan's latest comments.

USA Weekly Leading Index

USA Annualized Growth Rate

ECRI's Achuthan Says U.S. Economy Is in Recession July 10 (Bloomberg) -- Lakshman Achuthan, chief operations officer of the Economic Cycle Research Institute, talks about the performance of the U.S. economy. Achuthan speaks with Tom Keene and Sara Eisen on Bloomberg Television's "Surveillance." (Source: Bloomberg) Watch video here.

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USA Weekly Unemployment Claims Near 2012 Low

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U.S. Department of Labor: Unemployment Insurance Weekly Claims Report

In the week ending July 21, the advance figure for seasonally adjusted initial claims was 353,000, a decrease of 35,000 from the previous week's revised figure of 388,000. The 4-week moving average was 367,250, a decrease of 8,750 from the previous week's revised average of 376,000.

The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending July 14, unchanged from the prior week's unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending July 14 was 3,287,000, a decrease of 30,000 from the preceding week's revised level of 3,317,000. The 4-week moving average was 3,309,000, a decrease of 3,750 from the preceding week's revised average of 3,312,750.

Weekly Unemployment Insurance Claims by Week(Seasonally Adjusted)

Weekly Unemployment Insurance Claims by Week (Not Seasonally Adjusted)

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USA Retail Sales Decrease Third Consecutive Month

U.S. Census Bureau: Advance Monthly Sales for Retail and Food Services

USA Monthly Sales for Retail and Food Services




USA Annual Sales for Retail and Food Services



USA Monthly Retail Sales Largest Components

USA LEI Dips: "Economy is growing very slowly"

The Conference Board: USA Monthly Leading Index

The June 2012 USA Monthly Leading Economic Index dipped -0.3 to 95.6 (preliminary), the 2nd decrease in the past 3 months. Overall, continuing, slow economic growth is forecast but downside risk exists via the global economy becoming a drag.

USA Monthly LEI The June 2012 reading dipped below the May 2012 reading which was a post-recession high, the highest since 2008.



Ataman Ozyildirim, economist at The Conference Board, said "The U.S. LEI declined in two of the last six months, and its six-month growth rate has eased in the last three months. The strengths among the leading indicators have become less widespread as consumer expectations and manufacturing new orders offset gains in the financial, labor, and construction-related components. Meanwhile, the coincident economic index, a measure of current economic conditions, has risen slowly but steadily in the last three months".

USA Monthly Composite Indexes The June 2012 readings are chart highs for the Lagging and Coincident indicators. The Indexes have been revamped with benchmark revisions (2004 = 100.00).



Ken Goldstein, economist at The Conference Board, said "The U.S. economy is growing very slowly. The CEI basically reflects this steady but soft pace of overall economic activity. The LEI is pointing to no strengthening over the next few months, as the economy continues to sail through strong headwinds domestically and internationally".

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USA Unemployment Rate Steady at 8.2%, Jobs Remaining to Be Restored 5 Million

Bureau of Labor Statistics: Employment Situation Summary

The U.S. government has issued the monthly statistical, political, and market madness called the jobs report. The June 2012 unemployment rate was steady at 8.2% and the underemployment rate edged up to 14.9%. The USA economy created a paltry 80,000 jobs, but it was the 21st consecutive month of job gains.

Net job losses were 8.66 million during the 2008 - 2009 Great Recession. Net job gains have been 3.77 million in the subsequent 2010 - 2012 recovery. That leaves 4.89 million jobs to be restored to get the USA to back to even, to the beginning of 2008. This does not count any net increase in people entering the work force since the end of the Great Recession.

This jobs deficit and the structural shift in the economy explains some of why 50% of 2012 college graduates are unemployed or unemployed. This explains some of the reason 1 in 7 Americans receive food stamps and why just 1 in 4 households anticipate an improved financial situation during the year ahead.

USA Labor Force Participation Rate The June 2012 rate was steady at 63.8%. This is just above the April 2012 low of 63.6%, which was the lowest since December 1981. This means the inverse, 36.2% of all Americans 16-64 years old were not working for various reasons. The all-time high, since 1948, was a 67.3% participation rate in January through March 2000.




USA Employment to Population Ratio The June 2012 ratio was steady at 58.6%. This means the inverse, 41.4% of Americans 16+ years old are not working for various reasons. This ratio has been bottom bouncing, very little upward or downward movement, since September 2009. The ratio has been below 60% since March 2009. The all-time high, since 1948, was 64.6% in January through March 2000.



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Global Economic Growth Near Stagnation: Manufacturing & Services Output Plunges

JPMorgan & Markit Global Indexes

Global manufacturing growth plunged to a 3-year low and global services growth plunged to a 29-month low, the net result being a 35-month low in overall global economic growth for June 2012. This is a Post-Great Recession Low and "signalled the weakest expansion of output during the current near three-year period of growth". The Global All-Industry Output Index has been greater than 50, indicating the global economy is expanding, since August 2009, for 35 consecutive months.

The USA, comprising 28.1% of the total global output, had been the primary driver of world growth until June when manufacturing contracted and services slowed significantly. The Eurozone continues as the primary drag on global growth. China, UK, Russia also slowed and Japan is in contraction. The economies of India and Brazil expanded.

JPMorgan Global All-Industry Output Index The June 2012 reading of 50.3 (-1.8) indicates marginal expansion and is below February's 12-month high (55.4). That was the highest since the Index peaked at 59.1 in February 2011, which was a post-recession high. The post-recession low had been 51.3 in October 2011, but is now the current reading of 50.3 in June 2012. Historical back data has been revised, only the latest 7 months of revisions are reflected on chart. The general trend is not affected by the revisions and monthly data is materially correct.



David Hensley, Director of Global Economics Coordination at JPMorgan, said, "The PMIs suggest that the global economy downshifted into neutral gear in June. Output and new order inflows were only marginally above stagnation levels, signalling that global GDP growth over Q2 2012 as a whole will be the most sluggish for around three years."





Global Manufacturing Plunges to 3-Year Low!

China Manufacturing Contracts to 7-Month Low: “Lack of Demand”

USA Manufacturing Contracts in June to 35-Month Low!

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Global Manufacturing Plunges to 3-Year Low!

JPMorgan & Markit Global Indexes

The United States, Japan, China, Germany, United Kingdom, France, Italy, Brazil, and South Korea are now all in a manufacturing contraction, which resulted in a plunging Global Manufacturing PMI for June 2012. These are 9 of the top 11 manufacturing countries and represent 69.6% of the Global PMI. India continues expanding and data was not available for Canada. The Eurozone PMI in aggregate  is also in contraction.

JPMorgan Global Manufacturing PMI The current reading of 48.9 (-1.7) indicates a global manufacturing slowdown at a faster rate into an actual contraction. The PMI latest peak was 57.4 in February 2011. The post-recession high has been 57.7 in April 2010. The post-recession low was 49.7 in November 2011 before this latest reading. Historical back data has been slightly revised, only the latest 7 months of revisions are reflected on chart. The general trend is not affected by the revisions.



David Hensley, Director of Global Economics Coordination at JPMorgan, said, "The global manufacturing PMI fell below 50 for the first time since last November and only the second time in this expansion. Inventory adjustments appear to be driving the contraction in manufacturing, with the PMI showing that the rate of stockbuilding (finished goods) remains quite elevated amid sluggish gains in final expenditures."

China Manufacturing Contracts to 7-Month Low: “Lack of Demand”

USA Manufacturing Contracts in June to 35-Month Low!

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USA Manufacturing Contracts in June to 35-Month Low!

ISM: Monthly USA PMI


USA Economy The manufacturing sector not only stalled but contracted in June 2012. Even from my bearish viewpoint, this was a shock. I expected a smaller decline into stagnation, not a plunge into contraction. USA manufacturing growth dropped to a 35-month low (lowest since July 2009 at the end of the Great Recession). Before this contraction, there had been 34 consecutive monthly expansions (since August 2009). However, the USA economy continued to expand for the 37th consecutive month (since June 2009 with a reading greater than 42.6). The PMI of 49.7 is now below the overall average of 52.0 from January 2005 through June 2012.

ISM Manufacturing Index (PMI) by Month The June 2012 PMI decreased -3.8 to 49.7, the 3rd decrease in the past 5 months. The PMI reached a first post-recession peak in March 2010 at 59.3 and a higher peak in January 2011 at 59.9. The Great Recession low was 33.1 in December 2008. The post-recession low has been 49.2 in July 2009. A reading greater than 50 indicates manufacturing sector expansion and a reading greater than 42.6 indicates overall economic expansion.



Bradley Holcomb, Chair of the ISM Manufacturing Business Survey Committee said, "The PMI registered 49.7 percent, a decrease of 3.8 percentage points from May's reading of 53.5 percent, indicating contraction in the manufacturing sector for the first time since July 2009, when the PMI registered 49.2 percent. The New Orders Index dropped 12.3 percentage points in June, registering 47.8 percent and indicating contraction in new orders for the first time since April 2009, when the New Orders Index registered 46.8 percent. The Production Index registered 51 percent, and the Employment Index registered 56.6 percent. The Prices Index for raw materials decreased significantly for the second consecutive month, registering 37 percent, which is 10.5 percentage points lower than the 47.5 percent reported in May. Comments from the panel range from continued optimism to concern that demand may be softening due to uncertainties in the economies in Europe and China.".



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USA Sovereign Debt Exceeds GDP: Spendthrift Nation

The USA public debt continues greater than the annual GDP. That is, the debt ratio has exceeded 100%. Egan-Jones warned about this in their downgrade of United States sovereign debt to AA. Fitch Ratings reiterated it would cut the USA sovereign credit rating from AAA next year if a credible fiscal consolidation plan, deficit reduction, is not implemented. This is disturbing plus foolhardy as Americans enjoy the free ride while they can. Your share of the United States public debt is $50,281 and add another $1,300 for your share of this year's interest expense if we prefer not to roll the interest into the debt.

The two-party corporate political system kicks this debt bomb down the road with the blessings of their constituency and financial supporters. This is because a majority of Americans have bought into the fallacy that the government works for them and should be in charge of their lives in the name of the public good, safety, health, protection against the latest terrorists/enemies, and/or (insert your rationale here). Never mind this extravagant spending and ever-increasing government infrastructure must be charged to the sovereign credit card and not paid for in cash.

Of course, the government is actually for the benefit of the lobbyists, maximizing their profits, and keeping you under control. But just enough morsels are tossed out to the masses so they buy into the myth: "Government is the great fiction, through which everybody endeavors to live at the expense of everybody else" (Frederic Bastiat). The problem is this fiction cannot sustain itself and ultimately a Day of Reckoning cometh for the USA. The morsels will stop at that Day for American citizens. The government domestic security infrastructure and matrix that is being built up will sure come in handy to keep you subdued, obedient, and compliant when the American Dream stops.



This fiscal lunacy doesn't stop the federal spending on wars & military budgets, Homeland Security, TSA, NSA, CIA, & police state infrastructure, federal employee & military pensions & benefits, corporate welfare & subsidies, individual tax breaks & credits, social benefits & care, now the Affordable Health Care Act, and all the other free stuff and handouts every last American wants. A significant portion of this spending has to be funded by borrowing (30%+ of every dollar spent) and this keeps the fiction alive that you live in the Land of the Free. The major media, the corporate advertising delivery system, will continue to affirm this make-believe world for you and will act just as surprised as you when the Day of Reckoning arrives.



To perpetuate these unsustainable fiscal and monetary policies as long as possible, Chairman Ben Bernanke and the Bankster-controlled Federal Reserve must keep interest rates crammed down in a zero-interest rate environment, buy U.S. Treasury securities, and print money. He doesn't get one bit of assistance from the President or Congress to stop this madness as they dance to the tune of the lobbyists and show no inclination to balance the budget even for one year. If the Fed doesn't perpetuate this Ponzi scheme, the entire American Dream would blow up.

The interest expense on the USA's ever-increasing debt could skyrocket easily to $1 trillion annually if the interest rates got loose from Bernanke! Not only that, some of the Too Big To Fail banks might actually become insolvent from interest rate shock and counter party panic. The entire frigging financial system might meltdown! It's hard out here for the Wall Street Banksters! Ask JPMorgan CEO Jamie Dimon and his accomplices about that!




Charts consist of the latest data available from the Bureau of Economic Analysis (GDP at 3-31-12), U.S. Treasury (Public Debt at 6-28-12), and U.S. Census Bureau (Population at 7-1-12):
Public Debt $15.781 trillion
GDP $15.468 trillion
Population 313.857 million
Annualized Interest Expense $407.971 billion
Effective Interest Rate 2.67%

USA Sovereign Debt Now Exceeds GDP: Greetings From Big Brother

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USA Industrial Production Rises to Post-Recession High!

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Federal Reserve Statistical Release: Industrial Production and Capacity Utilization

This is "seasonally adjusted" which means if you torture the data long enough, it will confess to anything!

USA Monthly Industrial Production

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Weekly Leading Index: USA Recession Now?

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ECRI Weekly Leading Index and Annualized Growth Rate

Lakshman Achuthan and the ECRI According to Lakshman Achuthan's interpretation of his economic indicators (the Weekly Leading Index, the Annualized Growth Rate, and other metrics), a USA Recession is here, right now. He initially predicted in September 2011 there would be an eventual economic downturn. He has continued affirming since. Achuthan had said it could take up to a year from December 2011 to prove him correct. The video below is Achuthan's latest comments.

Weekly Leading Index

Annualized Growth Rate

ECRI's Achuthan Says U.S. Economy Is in Recession July 10 (Bloomberg) -- Lakshman Achuthan, chief operations officer of the Economic Cycle Research Institute, talks about the performance of the U.S. economy. Achuthan speaks with Tom Keene and Sara Eisen on Bloomberg Television's "Surveillance." (Source: Bloomberg) Watch video here.

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Weekly Unemployment Claims: NSA Spike to 26-Week High

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U.S. Department of Labor: Unemployment Insurance Weekly Claims Report

What to believe here? Seasonally adjusted weekly claims of 386,000 or spiking not seasonally adjusted weekly claims of 452,960?

In the week ending July 14, the advance figure for seasonally adjusted initial claims was 386,000, an increase of 34,000 from the previous week's revised figure of 352,000. The 4-week moving average was 375,500, a decrease of 1,500 from the previous week's revised average of 377,000.

The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending July 7, unchanged from the prior week's unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending July 7 was 3,314,000, an increase of 1,000 from the preceding week's revised level of 3,313,000. The 4-week moving average was 3,311,750, an increase of 1,000 from the preceding week's revised average of 3,310,750.

Weekly Unemployment Insurance Claims by Week(Seasonally Adjusted)

Weekly Unemployment Insurance Claims by Week (Not Seasonally Adjusted)

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USA Weekly Unemployment Claims Lowest Since March 2008, NSA Claims Spike HIgher

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U.S. Department of Labor: Unemployment Insurance Weekly Claims Report

What to believe here? Plunging seasonally adjusted weekly claims of 350,000 or spiking not seasonally adjusted weekly claims of 439,743?

In the week ending July 7, the advance figure for seasonally adjusted initial claims was 350,000, a decrease of 26,000 from the previous week's revised figure of 376,000. The 4-week moving average was 376,500, a decrease of 9,750 from the previous week's revised average of 386,250.

The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending June 30, unchanged from the prior week's unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending June 30 was 3,304,000, a decrease of 14,000 from the preceding week's revised level of 3,318,000. The 4-week moving average was 3,308,500, an increase of 1,250 from the preceding week's revised average of 3,307,250.

Weekly Unemployment Insurance Claims by Week(Seasonally Adjusted)

Weekly Unemployment Insurance Claims by Week (Not Seasonally Adjusted)

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OECD Leading Indicators: Easing in pace of economic activity

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OECD: Monthly Composite Leading Indicators

OECD Composite Leading Indicators: USA, Japan, OECD, UK, Euro Area

OECD Composite Leading Indicators: Brazil, Russia, India, China, Indonesia

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USA Employment Trends Index Decreases: "Slow growth is likely”

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The Conference Board: Monthly Employment Trends Index

Employment Trends Index by Month

Employment Trends Index by Year

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USA Weekly Leading Index & Annualized Growth Rate Just Above 2012 Lows

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ECRI Weekly Leading Index and Annualized Growth Rate

Weekly Leading Index

Annualized Growth Rate

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