Q1 GDP revised downward to 1.9%

posted at 10:01 am on May 31, 2012 by Ed Morrissey

The Commerce Department released its second estimate of economic growth in the first quarter, and as expected, the number got revised downward.  The advance report a month ago showed Q1′s annualized growth number at 2.2%, down from 2011Q4′s 3.0%, a significant drop, but the second estimate pegs Q1 growth even lower at 1.9%:

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 1.9 percent in the first quarter of 2012 (that is, from the fourth quarter to the first quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2011, real GDP increased 3.0 percent.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.2 percent (see “Revisions” on page 3).

The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, residential fixed investment, private inventory investment, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in the first quarter primarily reflected a deceleration in private inventory investment, an acceleration in imports, and a deceleration in nonresidential fixed investment that were partly offset by accelerations in exports and in PCE.

In last month’s report, I noted that real final sales of domestic product, which takes out inventory expansion, only increased by 1.6%.  That indicates a lack of demand, and hinted at a downward revision.  In the new report, this same indicator now comes in at 1.7%, close to the new 1.9% overall figure for the quarter.  I’d guess that the final number for Q1 will be unchanged when it gets released in another month.

Nor is that the only economic indicator today on the growth side to raise red flags.  After-tax corporate profits in Q1 fell for the first time in three years:

The department also said after-tax corporate profits fell at a 4.1 percent rate, the biggest decline since the fourth quarter of 2008, as taxes took a big bite from earnings. After-tax profits rose 1.1 percent in the fourth quarter.

What happens when profits fall?  Jobs don’t get created, and business doesn’t expand.  Don’t expect a significant boost in job creation this summer, in other words, or perhaps even the fall.  Looks like we’re in for another Stagnant Spring and Wreckovery Summer once again.


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Recovery Summer v4.0!!!!

ted c on May 31, 2012 at 10:04 AM

The phantom recovery strikes again.

hillbillyjim on May 31, 2012 at 10:04 AM

The only industry which is trending upward is the dog-meat industry.

Curious.

Bishop on May 31, 2012 at 10:04 AM

Damn liberal democrat policies are awesome.

Damn i love central planning and good intentions.

tom daschle concerned on May 31, 2012 at 10:05 AM

Corporate profits have worst quarter in three years.

That’s actually good news — for leftists. Isn’t that exactly what they say they want at all the OWS rallies?

jwolf on May 31, 2012 at 10:05 AM

Unexpectedly.

stout77 on May 31, 2012 at 10:06 AM

Revised downward? No way!

/

mankai on May 31, 2012 at 10:07 AM

More stimulus! Hurry!

ex_machina on May 31, 2012 at 10:07 AM

Obama will tell us that it’s ok if profits are down..Everyone knows that profit is evil.

kringeesmom on May 31, 2012 at 10:08 AM

Unexpectedly.

stout77 on May 31, 2012 at 10:06 AM

Beat me to it!

txmomof6 on May 31, 2012 at 10:08 AM

The only industry which is trending upward is the dog-meat industry.

Bishop on May 31, 2012 at 10:04 AM

As long as it’s not ammo sales. Oh, wait…

Archivarix on May 31, 2012 at 10:08 AM

can’t they just remove some companies from the rolls and allow the GDP to skyrocket? (reverse analogy from the dropping? unemployment)

SDarchitect on May 31, 2012 at 10:09 AM

…and even that is probably fudged!
…but we’re moving in the right direction (MSM)

KOOLAID2 on May 31, 2012 at 10:11 AM

Whoops! Time to gin up some more Birthers to talk about!

rockmom on May 31, 2012 at 10:12 AM

As long as it’s not ammo sales. Oh, wait…

Archivarix on May 31, 2012 at 10:08 AM

I stand corrected, my good man, completely forgot the lethal metals industry.

Speaking of which, that new FN SCAR down at Cabelas is looking mighty tasty, I may need to make a trip over there.

Bishop on May 31, 2012 at 10:14 AM

Less profits? Isn’t it time then for Barry to trot out a Mission Accomplished banner?

beatcanvas on May 31, 2012 at 10:14 AM

The last full month that Republicans controlled the House of Representatives, the Senate, and the White House was December 2006.

The Democrats took Majority Control of the House and Senate (and therefore Majority Control of the budgeting and spending process) on January 4, 2007.

The Democrats (including Speaker Pelosi and Senators Harry Reid, Barack Obama, Joe Biden, Hillary Clinton, and others) inherited a GOOD economy from the Republicans!

Unemployment was 4.4%

Employment and Revenues had both been increasing every year following the passage of the second part of the Bush Tax Cuts in 2003.

It is the Democrats, not Bush, who screwed up the economy.

ITguy on May 31, 2012 at 10:14 AM

I’m no alarmist but if things are not looking very promising come late summer. Stand by for some massive “evolution” on every wedge issue imaginable. Of course I don’t blame Obama. I would not want to be the one telling Mooch that the days of living large on the public dime were coming to an end.

Happy Nomad on May 31, 2012 at 10:15 AM

can’t they just remove some companies from the rolls and allow the GDP to skyrocket? (reverse analogy from the dropping? unemployment)

SDarchitect on May 31, 2012 at 10:09 AM

Thread winner……

SWalker on May 31, 2012 at 10:15 AM

The Commerce Department released its second estimate of economic growth in the first quarter, and as expected, the number got revised downward.

Wait a minute! Aren’t downward revisions always unexpected?

/MSM off

Steve Z on May 31, 2012 at 10:15 AM

He really needs to spend more to get this economy going because he really hasn’t spent that much yet…

/

Nick_Angel on May 31, 2012 at 10:16 AM

can’t they just remove some companies from the rolls and allow the GDP to skyrocket? (reverse analogy from the dropping? unemployment)

SDarchitect on May 31, 2012 at 10:09 AM

I think you are on to something. Maybe Canadian oil exports to China and bailouts to the EU could count toward the US GDP.

That would be awesome. Think of what spectacular economic growth we would have then!

WhatNot on May 31, 2012 at 10:16 AM

Who cares about corporate profits. What matters is LGBT employment rate. Right?

Archivarix on May 31, 2012 at 10:16 AM

The 0 Economy™

Bmore on May 31, 2012 at 10:16 AM

Do be aware that pointing out the abject failure of virtually every single one of the economic actions of earflaps mcSandtraps makes one “uncivil” and possibly “a big fat meanie head” in the eyes of certain lefty whiners.

That said- jeez, earflaps has sure screwed things up. This is a complete clusterfug of epic and historical proportion. The guy is a complete and utter failure.

It’s as if he has no training in business whatsoever. Oh wait- he does in fact have no training in business (or for that matter economics) whatsoever.

But not to worry- he can always golf. And sing snippets of Al Green songs. And ignorantly insult entire European nations. And like tweet and stuff.

GrassMudHorsey on May 31, 2012 at 10:16 AM

“There will be time for them to make profits, and there will be time for them to get bonuses — now is not that time. And that’s a message that I intend to send directly to them.” – Barrack ‘Death Camp’ Obama

Electrongod on May 31, 2012 at 10:17 AM

The Commerce Department released its second estimate of economic growth in the first quarter, and as expected, the number got revised downward.

Well,

Surprise, surprise, surprise!

ITguy on May 31, 2012 at 10:18 AM

I would not want to be the one telling Mooch that the days of living large on the public dime were coming to an end.

Happy Nomad on May 31, 2012 at 10:15 AM

I’m sure his presidential library — which I’m sure will be fit for a pharaoh or a Greek god — will keep her on board and not reaching for the divorce papers again.

Punchenko on May 31, 2012 at 10:19 AM

@ITguy on May 31, 2012 at 10:14 AM

Oh, you and your whatchacallum, your pesky “facts”. Do you honestly think facts and reality have any place in an argument with emotive and feeling lefties? They mean well- and well, you’re a meanie.

End of argument…lefty wins again.

/s

GrassMudHorsey on May 31, 2012 at 10:19 AM

My best guess is that it will be revised down to 1.7 in the end. Why? because the 0bama regime consistently spins out the first estimate over by 30%. Which is good enough for government wrok but would get you fired in the real world.

The other thing is that the Barry, The Destroyer, 0bama is upping the federal spending about 10% per year. The private sector is actually shrinking.

jukin3 on May 31, 2012 at 10:20 AM

What happens when profits fall? Jobs don’t get created, and business doesn’t expand. Don’t expect a significant boost in job creation this summer, in other words, or perhaps even the fall. Looks like we’re in for another Stagnant Spring and Wreckovery Summer once again.

Actually, workers get laid off, like yours truly.

As for the GDP in reality is was only 0.08% BEFORE the reduction, according to the consumer metrics institute. They explain the math and how the government faked the numbers, in excellent detail.

So when you work in the reduction real GDP is NEGATIVE.

dogsoldier on May 31, 2012 at 10:21 AM

The 0 Economy™

Bmore on May 31, 2012 at 10:16 AM

Zero?

Nothing From Nothing
Billy Preston

ITguy on May 31, 2012 at 10:21 AM

Hey! Look at the bright side, FOOD STAMP applications are UP!

GarandFan on May 31, 2012 at 10:24 AM

Most of the concern now is about the global slowdown, in particular in China and Europe. Europe is particularly worrying, as it appears they are heading into recession, which will add another headwind to our growth efforts. However, American consumers continue to spend: The drop in gas prices has put more money in people’s pockets, and it appears that the economy will continue moving forward through the Summer. Markets are understandably nervous about the news coming out of Europe, and the turbulence will continue until there is resolution there.

TouchdownBuddha on May 31, 2012 at 10:25 AM

Less profits? Isn’t it time then for Barry to trot out a Mission Accomplished banner?

beatcanvas on May 31, 2012 at 10:14 AM

.
Exactly! It’s a feature, not a bug!

ExpressoBold on May 31, 2012 at 10:27 AM

It’s must be Bush’s fault.

AZCoyote on May 31, 2012 at 10:28 AM

Yet nearly half of all Americans want to see Barack Obama re-elected?

So we can have four more years of this?

Unbelievable.

NoDonkey on May 31, 2012 at 10:29 AM

Why is it that there are never any trolls on these types of threads?

derecho on May 31, 2012 at 10:32 AM

Yet nearly half of all Americans want to see Barack Obama re-elected?

So we can have four more years of this?

Unbelievable.

NoDonkey on May 31, 2012 at 10:29 AM

I hear ya.

This election is not a referendum on Obama. It’s a referendum on the intelligence of the American people.

beatcanvas on May 31, 2012 at 10:32 AM

Yet nearly half of all Americans want to see Barack Obama re-elected?

So we can have four more years of this?

Unbelievable.

NoDonkey on May 31, 2012 at 10:29 AM

He’s likable…
♥ ♥ ♥ ♥ ♥ ♥
And he loves us back….

Electrongod on May 31, 2012 at 10:33 AM

He’s likable…
♥ ♥ ♥ ♥ ♥ ♥
And he loves us back….

Electrongod on May 31, 2012 at 10:33 AM

Y’know, even if I found him likable – I have plenty of friends.

I need a president, not another friend.

NoDonkey on May 31, 2012 at 10:34 AM

Speaking of which, that new FN SCAR down at Cabelas is looking mighty tasty, I may need to make a trip over there.

Bishop on May 31, 2012 at 10:14 AM

Damn, where be that mecca? Nearest to me I know of is like an expedition. Gander Mountain is an all day trip and just doesn’t hack it. I need a new 1911. I need a fix…bad!

Yoop on May 31, 2012 at 10:36 AM

Why is it that there are never any trolls on these types of threads?

derecho on May 31, 2012 at 10:32 AM

Excellent question, Derecho.

ex_machina on May 31, 2012 at 10:36 AM

I need a president, not another friend.

NoDonkey on May 31, 2012 at 10:34 AM

I hear ya..

Oh…
Someone just fainted…..

Electrongod on May 31, 2012 at 10:37 AM

Now, Mayor Bloomberg makes it harder for street vendors, cafe’s and restaurants to make a living by banning soda and slurpees.

New Yorkers deserve to be treated like the children they are!

Typicalwhitewoman on May 31, 2012 at 10:38 AM

What happens when profits fall? Jobs don’t get created, and business doesn’t expand. Don’t expect a significant boost in job creation this summer, in other words, or perhaps even the fall. Looks like we’re in for another Stagnant Spring and Wreckovery Summer once again.

..it’ll be more than that, Ed. Looming just after the election is another debt ceiling fight and gauging by Preezy’s Fight or Flight preferences for the last dust-up (and especially if he loses), he’ll be playing at least two rounds of golf per day. After that there’s the Taxmageddon thing that — one can be certain — the lame duck Congress and gummint will want to address in the 20 days or so left in their work year.

Oh yes, and then there’s the question of wither ObamaCare (or the unrejected remnants thereof) in 2013. Bottom line: not a screaming amount of certainty in that picture.

So, as AP puts it, here’s the exit question: given all this, as a business, how much hiring will you be doing over the next four or five months?

Naw, mate, the employment, spending, and economic numbers are gonna stink up the barn from now until JugEarz is gone.

The War Planner on May 31, 2012 at 10:38 AM

I’m sure his presidential library — which I’m sure will be fit for a pharaoh or a Greek god — will keep her on board and not reaching for the divorce papers again.

Punchenko on May 31, 2012 at 10:19 AM

No doubt there will be a large section of the Obama library devoted to Michelle. After all, she has been such an important part of the administration and has so many significant public policy achievements . . . or is she just a private citizen who is trying to raise two young daughters and deserves not to be scrutinized by the media? It’s awfully hard to keep up with the White House spin about Michelle’s role . . . . especially when they spin it in so many different and contradictory directions.

AZCoyote on May 31, 2012 at 10:39 AM

Why is it that there are never any trolls on these types of threads?

derecho on May 31, 2012 at 10:32 AM
Excellent question, Derecho.

ex_machina on May 31, 2012 at 10:36 AM

It’s because they do not know how economics works, they only get their info from the MSM

Conservative4ev on May 31, 2012 at 10:39 AM

Obama will tell us that it’s ok if profits are down..Everyone knows that profit is evil.

kringeesmom on May 31, 2012 at 10:08 AM

My nominee for thread winner.

MidniteRambler on May 31, 2012 at 10:43 AM

Why is it that there are never any trolls on these types of threads?

derecho on May 31, 2012 at 10:32 AM

Did you make it over to the ADP/unemployment thread below this one? Plenty of trolls there to feast upon. :-)

Steve Eggleston on May 31, 2012 at 10:43 AM

I’m no alarmist but if things are not looking very promising come late summer. Stand by for some massive “evolution” on every wedge issue imaginable. Of course I don’t blame Obama. I would not want to be the one telling Mooch that the days of living large on the public dime were coming to an end.

Happy Nomad on May 31, 2012 at 10:15 AM

I see your point & would agree that most people in such a situation might conveniently “pivot” or “evolve” or “focus like a laser”, blahblahblah.

But not Obama.

First, he’s too thick-headed to admit he’s wrong. Exhibit A: him insulting the entire population of Poland.

Second, were he to switch as you suggest, his base would simply not vote out of rage and everyone else would see it as blatant shameless pandering.

Third, SippyCup lives in the Unicorn Land of a different reality. He’ll simply quadruple-down-on-stupid.

SnarkySam on May 31, 2012 at 10:44 AM

Hey! Look at the bright side, FOOD STAMP applications are UP!

GarandFan on May 31, 2012 at 10:24 AM

“Yeah, and Nancy Pelosi told us that food stamps are a great stimulus for the economy!”

Expect MSNBC to actually run with this tonight.

MidniteRambler on May 31, 2012 at 10:45 AM

ISN’T THIS GREAT?

SO MUCH MORE FAIRNESS GOING ON OUT THERE!

Good Lt on May 31, 2012 at 10:47 AM

The best thing about this news is it keeps libs bobbing and weaving rather than attacking. Other than the declining gas prices due to the ongoing manipulation of oil it seems this will be the kind of news we get to “enjoy” for several more months. Any chance this will encourage the millions of Obama Lovers (living or dead) to either not vote, not vote or not vote.

sdbatboy on May 31, 2012 at 10:51 AM

Looks like we’re in for another Stagnant Spring and Wreckovery Summer once again.

Who cares?

Did you hear that Mitt Romney refuses to repudiate Donald Trump?

Flora Duh on May 31, 2012 at 10:52 AM

Gun sales at record levels…

PatriotRider on May 31, 2012 at 11:01 AM

voters will shortly start locking in their final impressions of the economy and its direction this summer

This voter locked in his final impression of the projected economy in the fall of 2008 when it became obvious who would be elected in november.

burt on May 31, 2012 at 11:03 AM

Not funny.

BruinEric on May 31, 2012 at 11:04 AM

We’re laying off 30,000 employees where I work. Yay! :^(

CliffHanger on May 31, 2012 at 11:06 AM

We’re laying off 30,000 employees where I work. Yay! :^(

CliffHanger on May 31, 2012 at 11:06 AM

Geez Louise! That sucks big time. Are you at liberty to say where that is?

Flora Duh on May 31, 2012 at 11:09 AM

Hope and Change BABY !!!!

Ragnar Danneskold on May 31, 2012 at 11:11 AM

The most dangerous place to be in america is in a democrat special interest group. The war on workers is in full blitzkrieg mode.

tom daschle concerned on May 31, 2012 at 11:13 AM

The only industry which is trending upward is the dog-meat industry.

Bishop on May 31, 2012 at 10:04 AM

October surprise, -little Bammie will announce an explosion of jobs in the horse-meat packing and slaughtering bidness, as a result of the bill he signed legalizing same.

Stallion-burgers for everyone! Mustang Chili! Pony Veal for the Italians!

slickwillie2001 on May 31, 2012 at 11:16 AM

At least this years college grads have a great outlook for getting hired./

docflash on May 31, 2012 at 11:56 AM

Corporate profits have worst quarter in three years.

“Yeah, maybe profits are down, but what about earnings? You rubes don’t even know there are two parts to a P/E ratio.” – barack-a-bama

Lost in Jersey on May 31, 2012 at 11:57 AM

I mentioned this little economic tidbit on an HA thread a few weeks back: European machine tool orders were DOWN over 10% for Q1 2012. THAT my friends is a solid indicator of how Obamanomics is working. The U.S. is the steam for the modern industrial engine and when nobody is has plans to make anything they DON’T order tooling. Tooling is a LEADING INDICATOR of money flow.
President Downgrade will be THE ONCE.
Oh, and I’ve heard from a friend that the Border Patrol has put a hold on hiring until after the November elections. Imagine that.

Missilengr on May 31, 2012 at 12:07 PM

Looks like we’re in for another Stagnant Spring and Wreckovery Summer once again.

…thanks again Obama Voters.

TX-96 on May 31, 2012 at 12:57 PM

…it’s the ECONOMY stupid…!!!

KOOLAID2 on May 31, 2012 at 1:09 PM

You have to read this from Ace on Twitchy:
http://twitchy.com/2012/05/30/ace-of-spades-goes-bizarro/

Bizarro 5 President

jukin3 on May 31, 2012 at 1:24 PM

We’re laying off 30,000 employees where I work. Yay! :^(

CliffHanger on May 31, 2012 at 11:06 AM

If your employer has any locations in Wisconsin, those locations shedding jobs will be surveyed by the BLS.

Steve Eggleston on May 31, 2012 at 1:52 PM

Damn, where be that mecca? Nearest to me I know of is like an expedition. Gander Mountain is an all day trip and just doesn’t hack it. I need a new 1911. I need a fix…bad!

Yoop on May 31, 2012 at 10:36 AM

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Marco on May 31, 2012 at 1:52 PM

Now, Mayor Bloomberg makes it harder for street vendors, cafe’s and restaurants to make a living by banning soda and slurpees.

New Yorkers deserve to be treated like the children they are!

Typicalwhitewoman on May 31, 2012 at 10:38 AM

What law gives him the power to do that and what idiot wrote it?

SKYFOX on May 31, 2012 at 3:28 PM

I guess that means that Obama’s favorite financial metric–the “Profit to Earnings Ratio” will be going down.

OBummer Wreckovery Summer.

PD Quig on May 31, 2012 at 4:06 PM