Was Q1 a Cash for Clunkers period?

posted at 10:41 am on April 30, 2012 by Ed Morrissey

Did a warm winter steal economic activity from the spring?  The Wall Street Journal’s Marketwatch warns that businesses and consumers may have already spent the cash they would have normally used in Q2.  The hiring boost from December to February may not have indicated any real economic boost, which is why March produced such anemic job growth:

The government reported last Friday that the U.S. grew 2.2% in the first three months of 2012, up sharply from 0.4% in the year-ago quarter. Read more on GDP report.

Yet many economists believe one of the warmest winters on record played a starring role. Business hiring and consumer purchases that would have taken place later in the year occurred in January and February instead. See charts of GDP report.

Similarly, many economists suspect the mild winter boosted hiring from December through February, with job growth averaging 246,000 a month. They believe hiring will pull back in April just like in did in March, when the government reported that just 120,000 jobs were created, based on a preliminary reading. …

Yelena Shulyatyeva, an economist at BNP Paribas, said the employment gain in April will probably be similar to the increase in March. BNP Paribas forecasts that 125,000 jobs were created last month.

The reason: Companies hired or retained workers during a warm winter and have less need to add employees now.

Right now, the projections for Friday’s report aren’t exactly scintillating.  The consensus for Marketwatch analysts is an additional 165,000 jobs and a steady 8.2% on the unemployment rate.   That would be marginally better than March’s 120,000, but still not much better than treading water in relation to population growth.  It would be slower than the three-month period of the winter that averages 217,000 jobs added a month, which isn’t exactly a barn-burner of a rate, either.

On the other hand, one key economic indicator exceeded Marketwatch consensus expectations today, but another fell short.  Personal income and outlays in March grew 0.4% and 0.3% over February, compared to expectations of 0.3% and 0.4%, respectively:

Personal income increased $50.3 billion, or 0.4 percent, and disposable personal income (DPI) increased $42.5 billion, or 0.4 percent, in March, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $29.6 billion, or 0.3 percent. In February, personal income increased $39.6 billion, or 0.3 percent, DPI increased $29.4 billion, or 0.2 percent, and PCE increased $93.7 billion, or 0.9 percent, based on revised estimates. Real disposable income increased 0.2 percent in March, in contrast to a decrease of 0.1 percent in February.

Real PCE increased 0.1 percent, compared with an increase of 0.5 percent.

The bad news here is that consumer spending didn’t make expectations, and real spending (adjusted for inflation) seems to have slowed significantly.  It’s still going up, but the rate of increase hasn’t kept pace.  That also points to a soft spring.  Reuters notes that gasoline prices account for the difference, and that the soft spring may have already started:

U.S. household income rose in March by the most in three months but consumers socked away part of the extra cash and only modestly increased spending, suggesting economic growth ended the first quarter on a soft note.

The Commerce Department said on Monday consumer income rose 0.4 percent last month. Analysts had expected a gain of 0.3 percent. After-tax income climbed 0.2 percent in March when accounting for higher prices.

Consumer spending rose 0.3 percent last month, also just below the median forecast in a Reuters poll of 0.4 percent.

When taking into account inflation, which has been fed in recent months by higher gasoline prices, spending was up 0.1 percent.

Don’t expect a significantly bad spring, based on these numbers, but don’t expect a return to even the mild growth we saw this winter.  Looks like the Stagnant Spring has already arrived.


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Treading water while your soaked clothes slowly pull you under and a group of Tiger Sharks swim toward you.

Bishop on April 30, 2012 at 10:45 AM

So a feckless affirmative action socialist who never accomplished anything of substance in his entire life has completely failed to improve the economy? Who would have guessed?

Cicero43 on April 30, 2012 at 10:46 AM

Was Q1 a Cash for Clunkers period?

Nothing says Monday like a giant screw.

You’ve got to love economists! They can find an excuse for anything be it ATMs that take away all those banking jobs or mild weather resulting in premature spending sprees!

It’s going to be interesting just how many excuses we hear as the death spiral continues from staganant spring to Election Tuesday!

Happy Nomad on April 30, 2012 at 10:47 AM

So a feckless affirmative action socialist who never accomplished anything of substance in his entire life has completely failed to improve the economy? Who would have guessed?

Cicero43 on April 30, 2012 at 10:46 AM

Me, about four years ago! But of course when Obama got elected, “moderates” demanded we give the jug-eared commie a chance before we became critical of his actions. You don’t hear much of that anymore.

Happy Nomad on April 30, 2012 at 10:50 AM

Yelena Shulyatyeva, an economist at BNP Paribas

Is that the Russian ginger spy chick? I wondered where she landed.

faraway on April 30, 2012 at 10:50 AM

Chicago PMI data is out, and the Dallas Fed Mf. index, and both would suggest that economic activity was pulled forward from the Spring.

Chicago PMI:

the headline nuimber was the worst since November 2009, the miss was the biggest since September 2009, Production of 57.1 was the lowest since September 2009, New Orders slide to 57.4 from 63.3, Supplier deliveries lowest since September 2011, and so on

Dallas Fed:

the Dallas Fed Manufacturing Index tends to be a little less of a headline-maker than many of its macro-data peers, today’s dismal report is worth paying attention to. The index turned negative for the first time this year, dropped to its lowest level in 7 months and missed expectations by the largest amount in 10 months. The drop from +10.8 to -3.4 is also the largest sequential drop in 11 months.

Weight of Glory on April 30, 2012 at 10:51 AM

Was Q1 a Cash for Clunkers period?

…4 years of “Hope and Change” has been nothing but a Cash for Clunkers…

Baxter Greene on April 30, 2012 at 10:51 AM

Right now, the projections for Friday’s report aren’t exactly scintillating. The consensus for Marketwatch analysts is an additional 165,000 jobs and a steady 8.2% on the unemployment rate. That would be marginally better than March’s 120,000, but still not much better than treading water in relation to population growth. It would be slower than the three-month period of the winter that averages 217,000 jobs added a month, which isn’t exactly a barn-burner of a rate, either.

..this is why I like HA. Ed, thanks for your continued analysis of the economy and those facetious polls that are being promulgated with dubious accuracy these days. You can really rip numbers to shreds.

Musta been a helluva manager when you worked in the “private” sector.

:-D

The War Planner on April 30, 2012 at 10:52 AM

Q1 – Cash for Clunkers

Q2 – The Walking Dead

faraway on April 30, 2012 at 10:52 AM

Treading water while your soaked clothes slowly pull you under and a group of Tiger Sharks swim toward you.

Bishop on April 30, 2012 at 10:45 AM

..not only first, but literate as well.

The War Planner on April 30, 2012 at 10:54 AM

Did a warm winter steal economic activity from the spring?

Obama:

“Global Warming is tanking the economy!!!”

…”.and Global Warming is the Republicans fault….so blame the Tea Party.”

…next.

Baxter Greene on April 30, 2012 at 10:55 AM

Globul warming is good for the economy. Who knew?

AH_C on April 30, 2012 at 10:55 AM

Treading water while your soaked clothes slowly pull you under and a group of Tiger Sharks swim toward you.

Bishop on April 30, 2012 at 10:45 AM

That’s where we were without Obama’s interference.

Now, we’re treading water while our soaked clothes slowly pull us under and a group of tiger sharks swim toward us while the lifeboat crews fire into us with automatic weapons.

Washington Nearsider on April 30, 2012 at 10:56 AM

Today’s report was not a major disappointment, as the numbers more or less confirm that the economy slowed slightly late in 1Q12 (which we already knew based upon the GDP number). We’ll be watching the April and May numbers closely; first look comes Friday with the April jobs report.

TouchdownBuddha on April 30, 2012 at 10:56 AM

That’s where we were without Obama’s interference.

Now, we’re treading water while our soaked clothes slowly pull us under and a group of tiger sharks swim toward us while the lifeboat crews fire into us with automatic weapons.

Washington Nearsider on April 30, 2012 at 10:56 AM

Oooooooo…nice addition to the image.

Bishop on April 30, 2012 at 11:00 AM

Did a warm winter steal economic activity from the spring?

Emphatically NO. High energy prices, inflation and chronic unemployment did that.

SWalker on April 30, 2012 at 11:00 AM

The bad news here is that consumer spending didn’t make expectations, and real spending (adjusted for inflation) seems to have slowed significantly. It’s still going up, but the rate of increase hasn’t kept pace. That also points to a soft spring.

….no problem….
……….the super smart liberals and Obama supporters have already determined that “slow economic growth” is good for the economy.

NPR Original Headline: ‘Is Slow Growth Good for the Economy?’

Read more: http://newsbusters.org/blogs/pj-gladnick/2012/04/27/npr-moderate-growth-good-economy#ixzz1tXIIUft1

…..dam#!!!!

If we’re lucky…maybe we can get another downgrade.

Baxter Greene on April 30, 2012 at 11:00 AM

Looks like the Stagnant Spring has already arrived.

Yeah, okay. But ObaMao was sooooo coool at the correspondents dinner! /clueless

cicerone on April 30, 2012 at 11:01 AM

Only 190 days until I can vote the commie ba$tards out…

Turtle317 on April 30, 2012 at 11:02 AM

That’s where we were without Obama’s interference.

Now, we’re treading water while our soaked clothes slowly pull us under and a group of tiger sharks swim toward us while the lifeboat crews fire into us with automatic weapons.

Washington Nearsider on April 30, 2012 at 10:56 AM

Oooooooo…nice addition to the image.

Bishop on April 30, 2012 at 11:00 AM

All it’s missing now is that part about the Captain who threw us overboard after tying an anchor to our feet…

SWalker on April 30, 2012 at 11:02 AM

Did a warm winter steal economic activity from the spring?

The Grinch stole Christmas, but Obama stole the Spring.

faraway on April 30, 2012 at 11:03 AM

Bishop on April 30, 2012 at 10:45 AM
Washington Nearsider on April 30, 2012 at 10:56 AM

Why I love HA !!
(soooo stealing these !! ;-)

pambi on April 30, 2012 at 11:05 AM

Musta been a helluva manager when you worked in the “private” sector.

:-D

The War Planner on April 30, 2012 at 10:52 AM

When I wasn’t blogging … ;-)

Ed Morrissey on April 30, 2012 at 11:08 AM

Oooooooo…nice addition to the image.

Bishop on April 30, 2012 at 11:00 AM

I couldn’t help myself.

The image I had in my head was the Titanic lifeboats being lit up by the Carpathia crew.

Frying pan. Fire. Some assembly required.

Bishop on April 30, 2012 at 10:45 AM
Washington Nearsider on April 30, 2012 at 10:56 AM

Why I love HA !!
(soooo stealing these !! ;-)

pambi on April 30, 2012 at 11:05 AM

Yeah. We’re here for you.

Over on another thread, the media argued that Obama’s the only one who can deliver humor. I submit HA posters can SMOKE the President when it comes to snark, humor and wit, all without teleprompters. (That we also destroy him on economics, foreign affairs and all things Presidential goes without saying.)

Washington Nearsider on April 30, 2012 at 11:10 AM

If the economy is down then of course it will be Bush or the republicans fault. Guess who will take credit if the economy goes up?

jukin3 on April 30, 2012 at 11:12 AM

When I wasn’t blogging … ;-)

Ed Morrissey on April 30, 2012 at 11:08 AM

Would the obvious super snarky catcall of “Get a real job” get me in trouble here???

SWalker on April 30, 2012 at 11:12 AM

I submit HA posters can SMOKE the President

Washington Nearsider on April 30, 2012 at 11:10 AM

Nope…. No smoking of President O’Bow-wow, it won’t get you high, and it will make you sicker than a dog…

SWalker on April 30, 2012 at 11:14 AM

I submit HA posters can SMOKE the President

Washington Nearsider on April 30, 2012 at 11:10 AM

Nope…. No smoking of President O’Bow-wow, it won’t get you high, and it will make you sicker than a dog…

SWalker on April 30, 2012 at 11:14 AM

ZING!

I (obviously, if you click on my name) picked up ‘smoked’ from the Marines who teach Navy Aircrew school. It’s stuck with me since then.

Besides, we all know you can’t teach an old dog new tricks.

Washington Nearsider on April 30, 2012 at 11:16 AM

If you were in the construction business in the Northeast, it absolutely did. And it was an extension of the prior period’s season, not an early start to the new one.

Chicken? Egg? Made sense to me when I thought it.)

FineasFinn on April 30, 2012 at 11:19 AM

I beleive Dick Morris covered all this at the beginning of February.

jaydee_007 on April 30, 2012 at 11:20 AM

Stagnation??!!

My Word!

Why, I dare say your implications are treasonous!

Seriously, something about the personal income/consumer, DPI/PCE numbers doesn’t add. I guess if the total some equals .1%, it’s simply a matter of people trying to keep up, but how if unemployment hasn’t moved.

I’d like to see these numbers correlated to household incomes. I have a feeling all the movement is with top earners, maybe as low as 150K, but none with the 50K and under crowd.

budfox on April 30, 2012 at 11:21 AM

Right, the economy is in the toilet because people already bought things in previous quarters.

The 15% unemployment, paralyzing energy and healthcare regs/punishments, rabid demonizing of people that actually have money left, and a complete democrat failure to produce any sort of spending limits (no budget for 3 years, 5+ trillion in new debt)on the mincing dolt in the white house has nothing whatsoever to do with it.

Bread and circus, and halitosis nero is fiddling.

GrassMudHorsey on April 30, 2012 at 11:24 AM

Where are the trolls to help deflect from the “It’s the economy…stupid”?
Birth control, Mitt said this, Bush did that, college loans set to expire during election year, what the Republican House did, oil companies, the Banks, Wall Street, the RICH, Ryan’s budget, blah, blah blah? Come on trolls!

KOOLAID2 on April 30, 2012 at 11:25 AM

Where are the trolls to help deflect from the “It’s the economy…stupid”?
Birth control, Mitt said this, Bush did that, college loans set to expire during election year, what the Republican House did, oil companies, the Banks, Wall Street, the RICH, Ryan’s budget, blah, blah blah? Come on trolls!

KOOLAID2 on April 30, 2012 at 11:25 AM

It’s only 0830 on the West Coast. They’re in their San Fran ready rooms getting briefed.

Washington Nearsider on April 30, 2012 at 11:36 AM

Where are the trolls to help deflect from the “It’s the economy…stupid”?

KOOLAID2 on April 30, 2012 at 11:25 AM

Hey, it is all in the spin. For example, by not having a job, you save on gas since you don’t have to drive to work.

Happy Nomad on April 30, 2012 at 11:38 AM

Washington nearsider@11:10
+ 10000

angrymike on April 30, 2012 at 11:40 AM

It’s only 0830 on the West Coast. They’re in their San Fran ready rooms getting briefed.

Washington Nearsider on April 30, 2012 at 11:36 AM

No, (You obviously haven’t spent much time here in California) not yet, their still down in somebodies basement having their crack and pot supplies issued to them for the day… No self respecting liberal troll would be caught dead coming out of the basement before the crack of noon…

SWalker on April 30, 2012 at 11:40 AM

Washington nearsider@11:10
+ 10000

angrymike on April 30, 2012 at 11:40 AM

Apparently I need to file away that comment for later. It’s clearly the greatest thing I’ve ever said.

Ever.

Washington Nearsider on April 30, 2012 at 11:43 AM

No self respecting liberal troll would be caught dead coming out of the basement before the crack of noon…

SWalker on April 30, 2012 at 11:40 AM

Yeah. I guess I did know that. Silly me, assigning my own values to them.

Looks like we’re safe for awhile then.

Washington Nearsider on April 30, 2012 at 11:44 AM

Apparently I need to file away that comment for later. It’s clearly the greatest thing I’ve ever said.

Ever.

Washington Nearsider on April 30, 2012 at 11:43 AM

..don’t let it go to your head, old son. It’s a Monday morning and we’re easily entertained.

;-)

The War Planner on April 30, 2012 at 12:01 PM

That would be marginally better than March’s 120,000, but still not much better than treading water in relation to population growth.

Rule of thumb is that you need 200,000 to stay even. If we have 165,000 and no change in unemployment then that would mean that 35,000 people’s unemployment benefits expired and they came off the unemployment roll as “discouraged workers” to replace the 35,000 who didn’t start their first job (so have not yet entered the workforce) or were laid off.

You need 200,000 to maintain the “workforce participation rate”, this 165K tells me that the workforce participation rate slipped a little bit, again.

crosspatch on April 30, 2012 at 12:03 PM

..don’t let it go to your head, old son. It’s a Monday morning and we’re easily entertained.

;-)

The War Planner on April 30, 2012 at 12:01 PM

aaaaaaaaaaand reality strikes back.

Washington Nearsider on April 30, 2012 at 12:03 PM

Where is angryed to tell us how wonderful Obama is?

Gunlock Bill on April 30, 2012 at 12:08 PM

You need 200,000 to maintain the “workforce participation rate”, this 165K tells me that the workforce participation rate slipped a little bit, again.

crosspatch on April 30, 2012 at 12:03 PM

This kind of slippage is a feature (not a bug) of Obamanomics.

Throw some dogs on the barby, cus we can’t afford steak anymore.

Gunlock Bill on April 30, 2012 at 12:11 PM

Great thread!! So far this morning, the headlines have had me laughing so hard, I had to take my glasses off and wipe my eyes. The lineup this am from different blogs, sites
NPR: Is slow growth good for our economy?
University finds WINDFARMS cause Global warming

Failed green energy company SOLYANDRA refuses to clean up the toxic waste, their process created

stormridercx4 on April 30, 2012 at 12:13 PM

stormridercx4 on April 30, 2012 at 12:13 PM

This morning has been particularly bountiful. :-)

Washington Nearsider on April 30, 2012 at 12:14 PM

Cash for Clunkers has its Ditchdriver in Chief, a toiletflusher no less.

Schadenfreude on April 30, 2012 at 12:21 PM

Q1 – Cash for Clunkers

Q2 – The Walking Dead

faraway on April 30, 2012 at 10:52 AM

Q3 – QE3 ….. ugh

FlaMurph on April 30, 2012 at 12:32 PM

To me that whole article sounded of desperation. All the stats about income and disposable income increasing. Its all phoney baloney.

As a salaried employee we got a merit increase in Jan. We only get 1 per year. So who are all these people (and where do they get all this data) about increasing incomes, and more disposable incomes?
And why are they trotting all these kinds of stats now?

orbitalair on April 30, 2012 at 12:37 PM

aaaaaaaaaaand reality strikes back.

Washington Nearsider on April 30, 2012 at 12:03 PM

..hang in there, kid. You’ll make the bigs when you learn to hit those curve balls!

;-)

The War Planner on April 30, 2012 at 12:49 PM

The government reported last Friday that the U.S. grew 2.2% in the first three months of 2012, up sharply from 0.4% in the year-ago quarter.

Adjusting for the REAL inflation rate and population growth, we haven’t had a single quarter of GDP “increase” in the last two years. GDP is SHRINKING at an alarming rate.

Why does even the WSJ make no effort to use accurate numbers?

logis on April 30, 2012 at 12:54 PM

OT: For the love of all good things… can we PLEASE kill the auto-refresh? I’ve lost reading position and articulate commenting due to this stupidity! If its to re-load comments or ads, do it through AJAX and DOM manipulation and stop killing the site for us!

dominigan on April 30, 2012 at 12:55 PM

Today’s report was not a major disappointment, as the numbers more or less confirm that the economy slowed slightly late in 1Q12 (which we already knew based upon the GDP number). We’ll be watching the April and May numbers closely; first look comes Friday with the April jobs report.

TouchdownBuddha on April 30, 2012 at 10:56 AM

honest to god when I read some of the early responses I said “Touchdown Budha will be around shortly to promise all is well with the economy and they are watching things closely”!!

what a freaking moby troll and shill. Can’t some of these obvious trollers be banned?!

AirForceCane on April 30, 2012 at 1:27 PM

And I thought it just couldn’t get any better
Chicken Crap is the new algae

stormridercx4 on April 30, 2012 at 1:36 PM

Looks like the Stagnant Spring has already arrived.

Oh, that’s just ‘the new normal’ under the policies of Barry Obama, world-renowned economist. Maybe it’s time for another Nobel in economics for The One.

GarandFan on April 30, 2012 at 3:24 PM

And how did durable goods orders do last month?

unclesmrgol on April 30, 2012 at 6:38 PM