The U.S. Economy: Escape Velocity To The Downside
Well, now we know why the new Wall Street brain trust consensus for an interest rate hike has been pushed out to September. Kick that can down the road some more. These Wall Street idiots really like to move around in herds. They’re like cattle, or sheep. Perhaps they even get treated like sheep by their male overlords, or herdsman if you will…
The Bureau of Economic Analysis reported that Q1 GDP came in at a .2% annualized rate of growth. The underlying numbers are far worse, however. But first, here’s an example of what downside “escape velocity” looks like (source Zerohedge, edits are mine) – click to enlarge:
The economy is tanking just like I’ve been suggesting in several previous posts. The change in real private inventories added .74% to Q1 GDP. This means that manufactures piled up inventory. BUT, real final sales of domestic product dropped .5% in Q1 (vs. a 2.3% gain, supposedly in Q4 2014). This means that the .2% GDP number was boosted .74% by manufacturers producing inventory that didn’t sell. If manufacturers produced goods at the rate those goods were selling, GDP would have been negative.
This is why we get graphs that look like this one, which shows business inventories to sales:
That graph shows a big part of the reason for “downside escape velocity.” If big manufactures had been applying “just in time” inventory management, GDP would have been negative because real final sales were negative.
If you want to read the rest of this, please click here: Investment Research Dynamics
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