There’s been a bit of a letdown in the Gross Domestic Product (GDP) number this morning.

GDP should be interesting this morning
The Atlanta Fed tries to model it in real time.. They say 1.1% Consensus among wall street is higher. Pretty much everyone predicts this will be the best quarter of the year. pic.twitter.com/8eB4HxeTTx

— Frog Capital (@FrogNews) April 27, 2023

Actually, it was a whale of a miss for the Pollyanna soft-landing types. They expected 2% growth and all they could scrape together was?

A very stagflationary cocktail this morning…

GDP Growth 1.1% (below expectations)
GDP Prices 4% (above expectations) pic.twitter.com/dklhmbdeEa

— Jack Farley (@JackFarley96) April 27, 2023

In the face of a disappointing result, cheerleaders for the administration are saying but, but, but, consumer spending remains “resilient”…

…Thursday’s estimate from the Commerce Department showed that the nation’s gross domestic product — the broadest gauge of economic output — weakened after growing 3.2% from July through September and 2.6% from October through December.

But consumer spending, which accounts for about 70% of U.S. economic activity, remained resilient, growing at a 3.7% annual pace, the fastest such rate in nearly two years. Spending on goods, in particular, was solid: It rose at its fastest pace since the second quarter of 2021.

…when actually the numbers inside the percentage are showing that the consumer is bracing for impact. In fact, the 3.7% personal/consumer spending number was itself a miss, as the consensus had been 4%, and corporate earnings this week have been reinforcing that impression that consumers are beginning to back off.

Looks like consumer spending slowed.. and consumers bracing for a storm. pic.twitter.com/zDFHpHlZ18

— Frog Capital (@FrogNews) April 27, 2023

As well, the percentage of disposable income going into savings has now dropped from a 2022 high of 17% to 4.8%. Those emergency funds are not being replenished if they have been depleted and saving is taking a back seat to surviving.

“Disposable” income is, of course, affected by prices and those came in hot, hot, HOT, contrary to the “inflation is transitory” crowd’s take on how well off we are price-wise.

…But while growth came in well below expectations, what the market was really freaked out about was the unexpectedly hot PCE* and core PCE prints, the former coming in at 4.0% above the 3.7% expected and higher than the 3.9% in Q4, while core PCE came in at 4.9%, well above the 4.4% in Q4 and also hotter than the 4.7% expected. In fact, as shown below, this was the 5th consecutive “beat” of median core PCE expectations.

*Personal Consumption Expenditures (PCE) and the index they use is “a measure of the prices that people living in the United States, or those buying on their behalf, pay for goods and services.”

Recession indicator? 🤔 pic.twitter.com/SNHqizOyQf

— Wall Street Silver (@WallStreetSilv) April 27, 2023

What’s the Fed to do with this mess? Any guesses?

*strokes chin*

Well, I could always pretend I’m Zelensky calling like those 2 clowns did with ECB’s Christine Lagarde. She spilled the beans on the CBDCs. Maybe Powell would…nah.

The Fed chair would NEVER fall for the old “Zelensky’s on the phone” tric…

YGTBFKM

Two More Hikes? Powell Makes Unexpected Admission During Prank Call With Fake Zelensky https://t.co/qhe8hShosY

— zerohedge (@zerohedge) April 27, 2023

Quit worrying about Tucker’s text messages and pay attention to what these malevolent clowns say to each other when they think it’s JUST THEM.

…More interesting was Powell’s admission, thinking he was speaking with Zelensky, during the call (which reportedly took place in January) that the Fed would hike rates two more times – a topic on which he has been far more circumspect even when giving testimony before Congress.

“The market is already pricing in two more quarter percentage point rate hikes. We’ll look around after we make those two and we’ll say should we do any more, and then the question will be how long do we keep rates at this level – and I think we’ll keep them there for quite some time,” said Powell, roughly two minutes into the clip below.

…Powell also said that the US economy will grow ‘at a subdued level,’ and that a recession is “almost as likely as very slow growth,” and that it was because the Fed ‘raised rates quite a bit,’ which he defended as necessary to tame inflation.

“What we need is a period of slower growth so that the economy can cool off, so the labor market can cool off, so that wages can cool off. That’s how inflation comes down. That’s the only way we know to bring inflation down. And it can be painful, but we don’t know of any painless way for inflation to come down.”

Rate hikes are hurting, that’s for sure. Another huge YOWSAHS this morning? Pending home sales crashed. There was an expectation of 0.8% increase and they got themselves a -5.2% miss.

Weaker housing data today as Pending home sales decline 5.2% versus a consensus rise of 0.8%. YoY sales decline -23.3% (-20.7% consensus) vs -21.1% in March. Only the South was up. The MidWest dropped the most. pic.twitter.com/47BnVSXHqn

— Macro84 (@macro84) April 27, 2023

Now, there are a couple takes on housing, one of which is that the volume and size of the Fed rate hikes have literally trapped people in their homes. Where they might have sold and moved up, the interest rates all but guarantee they can’t get into something bigger and better, so no one moves unless they have to. Pretty soon the scarcity will drive available housing prices higher.

I just don't see a housing crash.. The idiots at the fed made it so people are trapped in their homes.
When supply decreases, price usually goes up.
They'll probably give up hiking after next week anyway. https://t.co/JM1oTu9PDc pic.twitter.com/mMGRzNExFD

— Frog Capital (@FrogNews) April 25, 2023

Will building new housing stall because of core costs and lack of buyers thanks to rate hikes? That will aggravate the situation further.

In some encouraging housing news, GOP senators are lighting the administration up regarding their latest scheme to make buying a house even more expensive for those who’ve taken care of their credit over the years.

Senate Republicans are taking aim at a “shortsighted” Biden administration rule that will force homebuyers with good credit scores to pay higher mortgage rates and fees to subsidize people with riskier credit ratings who are also in the market to buy houses.

…“These mandated changes … will result in serious and lasting harm to our housing economy, and cannot take effect as scheduled on May 1,” Mr. McHenry wrote with committee member Warren Davidson, Ohio Republican. “As the director of FHFA with a statutory duty to ensure that ‘each regulated entity operates in a safe and sound manner,’ we call on you to take the necessary steps to reverse these unwise changes and eliminate this tax on creditworthy borrowers.

“If you are unwilling or unable, the committee is prepared to take action to repeal them legislatively and reconsider the parameters of FHFA’s authority under statute to mandate any similar pricing changes going forward.”

I love the “fix it or we will PLUS shorten your chain while we’re at it” tone. We need more of THAT.

Maybe someone should give the morons at the Fed another call.

On second thought, maybe not.