The economic slowdown continues led by income and consumer spending.
The BEA made significant revisions to Gross Domestic Product (GDP) and Gross Domestic Income (GDI) data for 2024 Q1 and 2023 Q4 respectively.
GDI is not reported in in the first release of GDP so the revision for GDI pertains to 2023 Q4.
GDI reporting lags GDP reporting by a month in the first three quarters of the year and by two months for the fourth quarter.
Due to lags, GDP gets all the media writeup, but many analysts, me included, think GDI is a better number to watch.
Significant Negative Revisions
- 2024 Q1 GDP went from 1.6 percent to 1.3 percent.
- Based on updated data from the Bureau of Labor Statistics Quarterly Census of Employment and Wages program, Wages and salaries are now estimated to have increased $58.5 billion in the fourth quarter, a downward revision of $73.0 billion.
- Real gross domestic income is now estimated to have increased 3.6 percent in the fourth quarter, a downward revision of 1.2 percentage points from the previously published estimate of 4.8 percent.
Real GDP and GDI in Billions of Dollars
Chart Notes
- Gross Domestic Product (GDP) and Gross Domestic Income (GDI) are two measures of the same thing. Product produced should match sales and income. They do over time, but this is a large ongoing discrepancy.
- Real Final Sales is the bottom line estimate of GDP. The difference between GDP and Real Final Sales is inventory adjustment which nets to zero over time.
- Real means Inflation adjusted using the GDP deflator as calculated by the BEA as the adjustment.
GDP Details
- Real gross domestic product (GDP) increased at an annual rate of 1.3 percent in the first quarter of 2024.
- In the fourth quarter of 2023, real GDP increased 3.4 percent.
- In the advance estimate, the increase in real GDP was 1.6 percent. The update primarily reflected a downward revision to consumer spending.
Personal Income
- Disposable personal income increased $266.7 billion, or 5.3 percent, in the first quarter, an upward revision of $40.5 billion from the previous estimate.
- Real disposable personal income increased 1.9 percent, an upward revision of 0.8 percentage point.
- Personal saving was $796.6 billion in the first quarter, an upward revision of $96.6 billion from the previous estimate. The personal saving rate—personal saving as a percentage of disposable personal income—was 3.8 percent in the first quarter, an upward revision of 0.2 percentage point.
Income rose 5.3 percent. Adjusted for inflation, income rose 1.9 percent. Those are annualized numbers. Good luck if you are looking to buy a house.
Gross Domestic Income and Corporate Profits
- Real gross domestic income (GDI) increased 1.5 percent in the first quarter, compared with an increase of 3.6 percent (revised) in the fourth quarter.
- Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $21.1 billion in the first quarter, in contrast to an increase of $133.5 billion in the fourth quarter.
- Profits of domestic financial corporations increased $73.7 billion in the first quarter, compared with an increase of $5.9 billion in the fourth quarter. Profits of domestic nonfinancial corporations decreased $114.1 billion, in contrast to an increase of $136.5 billion. Rest-of-the-world profits increased $19.3 in contrast to a decrease of $8.9 billion. In the first quarter, receipts increased $29.8 billion, and payments increased $10.5 billion.
Data Weakening Continues
The two key points in this release are the downward revision of 1.2 percentage points in GDI in 2024 Q3 and the BEA comment “The update primarily reflected a downward revision to consumer spending.”
Flashback April 25, 2024: Expect Big Negative Revisions to BLS Monthly Jobs in 2023, GDP Too
Yesterday, the BLS released a little-read jobs report that shows reported jobs in 2023 may be wildly overstated. In turn, that means GDP is likely overstated as well.
The BLS says that the BLS monthly job reports for 2023 Q2 and Q3 are overstated by a total of 1.321 million jobs.
Jobs were overstated by 1.3 million. Mainstream media totally missed this. Now we see Income revised lower with a downward revision to consumer spending.
Note that those revisions are for Q2 and Q3. What will Q4 revisions be?
Discretionary Spending Tumbles at Target
On May 22, I noted Discretionary Spending Tumbles at Target, Shares Drop 10 Percent
Target CEO Brian Cornell said the results show “continued soft trends in discretionary categories.”
The interesting word above is “continued”.
Walgreens Cuts Prices on 1,500 Items as Did Amazon and Target
Yesterday, I noted Walgreens Cuts Prices on 1,500 Items as Did Amazon and Target
Who’s Next at the Confessional?
So its “continued soft trends” at Target and a “challenging retail environment” at Walgreens coupled with lower guidance. Who is next at the confessional?
EVs Hit Brick Wall
The Inflation Reduction Act provided stimulus for a while, but it also caused the auto manufacturers to gear up for cars that few want now.
EVs have hit a brick wall. IRA stimulus has gone into reverse.
On April 2, I commented Tesla’s Deliveries Drop for First Time Since 2020, It’s Demand Not Supply
On April 15, I noted Elon Musk Fires 10 Percent of Tesla Workforce, Prepares for “Next Phase of Growth”
New Home Sales Huge Negative Revisions
New Home Sales plunged in April. And the Census Department completely revised away the fictional 8.8 percent rise in March.
For discussion, please see New Home Sales Sink 4.7 Percent on Top of Huge Negative Revisions
This economy is weakening much faster than economists realize.
“Discretionary Spending Tumbles at Target”
Apparently, 80% now consider fast food to be a luxury.
We are now in a similar situation as in 2019…
https://charleshughsmith.blogspot.com/2021/09/the-illusion-of-stability-inevitability.html
Global economy already set for historic contraction
Tiger index suggested collapse in activity before the height of the coronavirus crisis
“The global economy was facing the worst collapse since the second world war as coronavirus began to strike in March, well before the height of the crisis, according to the latest Brookings-FT tracking index. “The index comes as the IMF prepares to hold virtual spring meetings this week, when it will release forecasts showing the deepest contraction for the global economy since the 1930s great depression. https://archive.md/UUfl2
They can’t repeat what they did under the cover of Covid — and unleash The Mother of all Stimulus on the world… can they????? Surely what would result in hyperinflation…
What will they do this time?
Some sort of end game is approaching.
Why do these government statistics always come in on headlines super-optimistic, and always get revised downward later on (long after the headline went by)?
If these were “honest” errors by our public servants, one would expect at least 1-2 upward revisions after the fact.
Clearly these bureaucrats hate the public and are producing garbage numbers while charging taxpayers an enormous salary. Time to fire them all. The economy ran better before they started “helping” and centrally planning.
This is done so that the herd does not panic… the herd never sees the revisions.
https://mishtalk.com/politics/jean-claude-juncker-luxembourg-pm-and-head-euro-zone-says-when-it-becomes-serious-you-have-to-lie/
Money supply is growing too fast.
Agree. I’ve said the better way to get inflation down is to stop the money supply for a few weeks. Then start regulating commodity derivatives like its 1999. The problem is the people with the most to lose have bought and paid for this inflation.
I’m thinking … the folks at the Fed are a bit more capable and informed than the rest of us…
They know what they are doing … it won’t end well… but they are keeping the train on the tracks for as long as possible.
A cool Trillion every 100 days (and who knows what else they are doing that they don’t tell us about)… unfortunately they have no choice… the alternative is immediate collapse of the global financial system … and the supply chains.
Kinda like what almost happened in 2008 except that they hosed things down with even more stimulus …
Then again in 2019… just prior to the launch of Covid… did I say launch??? Gosh … I need to take my Tin Foil Hat off… they didn’t launch Covid … it happened naturally!!!
Wolf Richter helps me to understand how stupid I am.
Wolf the Tesla Fan Boy?
Wolf the guy who said self driving taxis were a home run in San Fran (till they were banned due to causing traffic snarls and running over people).
Wolf the guy who if you post anything that challenges his theories — will delete you – or refer to you as a asshole?
How many thoughtful commentators has he driven off his site — so many that it is his own private echo chamber
That Wolf?
Yes! That’s the guy. Fuck him.
He’s driven loads of very insightful commentors off of his site with his outbursts..
When I used to frequent his site there was one guy ‘Banker’ who he ripped into .. never saw him again.
Wolf comes across as a very angry person … I wonder what is wrong with him… some form of mental illness?
Wolf is too full of himself sometimes
Inflation causes Depression. Immutable fact. Unstoppable.
‘Recession’, which is the devaluation of bloater ‘equities’, can be temporarily delayed by increasing inflation. Until…….
The ATL’s FedNow got it even wronger than we thought. Their data is completely worthless. Even worse, people rely on their data as if it is meaningful. Time to shut down GDP NOW .
If you want to know the state of the economy read the quarterly reports from businesses. In almost every industry a few players control most of the market i.e. Walmart vs Amazon, Microsoft vs Google, Lenovo vs HP, etc.
How these companies perform are the best snapshot because they are in it for the money not the political circus.
“If the alternative is a bankrupt government followed by a plunging currency, it would seem that the best of a bad set of options is to raise interest rates only modestly (if at all) and let the yen go where it goes. Welcome to the fate of all fiat!”
https://rubino.substack.com/p/japan-death-spiral-update-now-inflation?
Salesforce stock down 20%, Kohls stock down 23% along with all the other things already reported on so yeah I would say things are slowing too.
On the flip side, AI PCs will come out later this summer and I for one am seriously thinking of picking one up. HPQ stock is up is up 20%, it’s a bifurcated economy which leads to a “rolling recession” from industry to industry, geography to geography and demographic to demographic.
AI PC …(monkey scratches head hard until it bleeds and then licks finger to taste the blood)
I don’t know much about AI. Does the PC come with your own personal data center and a massive amount of meta data? It seems that AI was developed out of the need of intelligence agencies (the NSA) to sift and process their massive troves of collected (stolen) information and data that is too large for humans to sort through and utilize. After processing, it can be reviewed by a case manager. For example, a human agent request an auto-generated report on another human target who’s name is typed into the program and the enter key (tell me what to think button) is pressed. Or maybe if you are scanning x-rays for lung cancer at a doctor’s medical practice…….in theory because even doctors won’t have the money for their own reference data set so it’s still controlled externally. What are you going to use your artificial intelligence for, just curious? I rarely see people using their own intelligence so I’ll be blown away if humans are smart enough to properly wield some external dumbed down form of intelligence.
“What are you going to use your artificial intelligence for, just curious?”
To maximize profits, learning, data aggregation, and back testing amongst a few things. AI is going to be like those first generation smartphones or the internet or anything else that revolutionized the world.
The first to master it usually get richer and far ahead of the curve than others. Think about the first people to get electricity, that first car, the first 3200 baud modem, the Blackberry, the iPhone, the tablet, etc.
Here is another idea.
https://www.youtube.com/watch?v=UbDyjIIGaxQ
I appreciate the response and video link. I won’t give my philosophical take on what this looks like it will lead to since it would be too long of a write up and it would not be based on personal technical knowledge of AI or what you are probably interested in using it for on a more specific level. The best I can say is that at this point I think the Amish / Mennonites are going to end up looking like the only sane, healthy, intelligent, and functional people in the US (despite whatever problems about them can easily be pointed out). Good luck to your endeavors and I like to see people knowing what they want to do and not be followers.
AI PCs….. 🤣😂🤣😂🤣
Ima start selling AI hammers and AI PBJ sammiches
Time for Biden to have some unarmed black guy killed by the police. Word to young black guys: stay home until November 6th.
They tried the Nazis are in I think it was Greenwich CT. Funny how everyone looked like an FBI agent, And the media immediately downplayed the whole thing. They are already trying stuff like this.
Yup Greenwich is full up with Nazis no doubt about it
Government statistical data is revised downward. This is a recurring theme. I’m curious whether these consistently optimistic (i.e. overstated) data points are (a) normal, or (b) intentionally overstated in response to political pressure. Given that it’s an election year and the current administration is desperate to peddle good news, methinks it’s the latter.
US GDP declined every year for the past four years. Check shadowstats for the inflation corrected GDP.
Why is the USD the world’s reserve currency? What are the mechanisms which created this situation, which uphold the reserve currency status and those which threatend the USD status? In terms of both domestic and foreign policy.
Because if a country crosses us, the CIA kills their leaders and we bomb their country.
The hammer hit the nail on the head.
Ha ha. We do that in country but with different weapons.
More along the lines that the US runs a persistent trade deficit sending USDs overseas, mid east oil creating the Eurodollar market (we never needed imported oil). What do overseas do with those dollars? Buy USTs and other assets, liquid and low vol markets (USTs are guar-un-teed repayment).Then of course military persuasion, CIA is just an arm of persuasiveness … SO WHAT HAPPENS IF WE NO LONGER RUN PERSISTENT TRADE DEFICITS? And if that was part of MAGA? Imperial regime must switch to something else …
Yeah, that too Sic Hildebeast or Vicky the Hut on them
It’s all very simple. Our reserve currency status is backed by the barrel of the gun. It is only the US that has the maritime military capabilities to create and protect open sea lanes. Thanks to our allies and strategic partners the Us has a military bases in 1 out every 4 countries with 67 defense agreements with 67 different countries. This helps ensure that global trade is always open and free. That said, this is why we have reserve currency status. Don’t overcomplicate it!
1.Dates after WW2. Full blown after dates to Nixon – – – .
2.Inflation, national debt, confiscation of foreign assets especially major countries.
3.All the so called rich countries want. They want it exchange for manufacturing base and realise it late.
4.BRICS is threatening. Using their own currencies trading between themselves. Eg. PetroYuan. Even if it is not major threat they are undermining USD, Euro, Yen. And the momentum.
Because we were the least devastated by WW2 I think
Everything now is always 100% of the time revised lower.
What a coincidence.
On a per capita basis, the “economy” has been shrinking for years, if not decades.
That’s because the rich get richer and the poor get children. Life is full of choices.
Economy is measured in USD. Because of deficit spending economy is expanding although real economy , manufacturing is shrinking.
Raise rates another 200 bps and get rid of 100% of the illegal ponzi propping balance sheet by the end of 2025 and we might make some progress
Better yet, just shut down the criminal enterprise altogether and END THE FED….. there appears to be more and more momentum behind this as a handfull of US Senators are now behind the movement and everyday Americans (including Libertarians) are now asking, “what is the FED?”
The Q1 downward revision is noise. It’s not like it got revised to being negative.
Are you purposely trying to be a jerk or does it come naturally?
I’m not a jerk. Sometimes I agree with your posts and sometimes I don’t. Sorry if it hurts your feelings. Here’s a truth no one wants to hear: Most economic data is noisy.
We have stagflation. Inflation is intentionally understated. That makes real GDP overstated, We are in an inflationary cycle with no real growth.
yes
Thus, on a per capita basis we have been in recession/depression for years, if not decades while “papering it over” with astronomical amounts of debt that cannot and will not be repaid.
Correct
Remember when Fed Head Yellen was really into “optimal control”. They were looking for a steady state economy, no more recessions, no more bubbles. Ha ha ha. They’ve just stretched out the time between these unpleasant and unwanted economic interludes which become more horrific requiring more draconian FED responses. Business cycle, who needs a cycle, lets be always on! More or less. I don’t fault anyone for not remembering because listening to Yellen speak was an excellent soporific.
Is this the same Janet who says that climate is an existential crises while the economy and banking system are sound and resilient?
Damn it Janet! Remember that the freaks are actually aliens … https://www.youtube.com/watch?v=t4WP3bODmfo
Wish she would just make pudding or cupcakes for her grandchildren and STHU
Deeply troubling numbers