Morning Report – Q4 GDP disappoints 3/27/15

Markets are lower this morning after the final revision to fourth quarter GDP came in lower than expected. Bonds and MBS are up.

The final revision to fourth quarter GDP came in at 2.2%, flat with the second revision and below the 2.4% street estimate. Personal Consumption was revised upward to 4.4% from 4.2%. The core Personal Consumption Expenditures Index (the preferred measure of inflation for the Fed) came in at 1.1%, well below their 2% target.

The University of Michigan Consumer Sentiment index rose to 93 in March.

At 1:30 Janet Yellen will be speaking in San Francisco about monetary policy. She probably won’t say anything market-moving, but just be aware.

Senate Minority Leader Harry Reid is retiring. NY Senator Chuck Schumer is the favorite to replace him. NV will almost undoubtedly swing Republican. Schumer is generally financial sector friendly, so that should help the business, for what it is worth. Democrats are worrying about 2016 and the fact that their war on Wall Street means banks are pulling back campaign contributions. Also, affordable housing advocates are getting sick and tired of tight credit.

Reinhart and Rogoff have another paper about high levels of government debt. It looks at how governments have handled these situations over the past two centuries. Governments will need to be creative in dealing with it, and the solutions will probably involve confiscatory taxes, default, and inflation.

29 Responses

  1. Frist!

    Suck it, haterz!

    Like

  2. What, if anything, does the Warren Amendment actually do?

    http://www.warren.senate.gov/files/documents/GAI15314.pdf

    Looks like it opens an empty bank account. Money is gonna fall in it by magic?

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  3. Teh Krugman:

    http://www.nytimes.com/2015/03/27/opinion/paul-krugman-mornings-in-blue-america.html?_r=0

    “Were President Obama’s policies the cause of national job growth? Did Jerry Brown — the tax-raising, Obamacare-embracing governor of California — engineer his state’s boom? No, and few liberals would claim otherwise.”

    Really? Few being defined as “something less than 99%”?

    “Still, don’t liberals have similar delusions? Not really. The economy added 23 million jobs under Clinton, compared with 16 million under Reagan, but there’s nothing on the left comparable to the cult of the Blessed Ronald.”

    Krugman has never noticed any idolatry of FDR on the left? Of course, the issue being, conservatives idolize their politicians for job creation and economic growth (rational or not), their espoused conservatism, and their military prowess, or at least posturing, while those on the left tend to idolize their politicians for the growth of entitlements and regulatory bodies and the general expansion of the nanny state. And, of course, their espoused liberalism.

    The idea that liberals are free of delusions because reality has a liberal bias strikes me as suspiciously self serving, as the only people I ever hear offering that opinion are liberal. And if as a rational and reality-based on all things as claimed, they should at least provide a caveat that it does seem a little suspect that they just happen to be on the same side as all the smart and logical and clear-minded folks.

    “olid job growth both at the national level and in states that have defied the right’s tax-cutting, deregulatory orthodoxy”

    Half-true, at best, given that many lower-tax states have done quite well, and that nationally, most of the Bush tax cuts are still in effect, and Obama had some tax cuts of his own that could have, at least in theory, contributed to the economic recovery.

    But it’s mainly the idea that the left, generally, has no idols, because they are rational secularists, while the right uniformly idolizes Reagan, because they are rational, primitive religionists that sticks in my craw.

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  4. “Krugman has never noticed any idolatry of FDR on the left? ”

    Or Keynes. The main takeway from Krugman is that he glosses over this:

    “What we’ve been seeing at both the national and the state level is mainly a natural process of recovery as the economy finally starts to heal from the housing and debt bubbles of the Bush years.”

    That was supposed to be impossible absent more stimulus. Depression for several more years at least.

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  5. Krugman is sounding more and more like an economic Waldman…

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  6. Reinhart and Rogoff have another paper about high levels of government debt. It looks at how governments have handled these situations over the past two centuries. Governments will need to be creative in dealing with it, and the solutions will probably involve confiscatory taxes, default, and inflation.

    What’ve I been sayin’!

    Like

  7. And we’re one step closer to a MSU vs UW final. Go Spartans!

    Like

    • Congrats to the Izzos and ‘Goose.

      490# leg press? Good grief, Lulu! And I think that is fantastic, in a good way.

      KW, I tend to agree with you almost always on human conduct issues. Some people are angry. Other people are very difficult to irritate. Angry conservatives and angry liberals are a dime a dozen because angry people are a dime a dozen, and politically seem easily manipulated because they are angry.

      A basic life lesson is not to partner up with an angry person. Have low expectations and never be disappointed. Never say “How come you never…”, “why don’t you ever…”, “the trouble with you is…”, and “if you would only see it my way.” Avoid people who do that in your personal life. Run like hell from a girl friend who begins that routine. Be happy. Let the chips fall where they may. Root for your team but don’t get a stroke when they lose. Same in politics.

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      • Mark:

        Angry conservatives and angry liberals are a dime a dozen because angry people are a dime a dozen

        Again, I think the point of the article that raised this issue was not that leftists are more angry than conservatives, but was rather that leftism, because its success as an ideology is so dependent upon the participation/agreement of other people, is prone to being frustrated in ways that other ideologies are not.

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        • Scott, not all utopians are on the left. It is not so much “left” or “right” politics that tends to cause frustration/anger/rage, but utopianism, because utopianism is delusional. Thus we have angry Muslim extremists, angry Hindu extremists, angry extremists among the far left and the far right in the USA. Being a conventional American liberal – a tinkerer with using government/taxes to solve perceived problems – or a conventional American conservative – don’t take my money to fix far away problems, we got plenty close to home – doesn’t lead to anger. Unmet expectations that can never be met : “Racial purity”, the imaginary idyllic America of the 19th century, a benevolent one size fits all state that “ends poverty”, “the Caliphate” and virgins welcoming the martyrs to Paradise; it’s all bullshit. And the partisans of these views tend to be angry, because they just aren’t getting how everyone doesn’t agree with them and fall in line.

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        • Mark:

          And the partisans of these views tend to be angry, because they just aren’t getting how everyone doesn’t agree with them and fall in line.

          I’m curious…did you read the article that prompted this discussion?

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        • Mark, do you think that ideas can have consequences for the people who hold those ideas? And, if so, do you think that different ideas can have different consequences?

          Like

  8. Go Badgers! Final Four, baby!!

    Did you have a gig tonight, Brent?

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  9. What would a President Warner do if Reinhart and Rogoff are correct?

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  10. Did you have a gig tonight, Brent?

    Yes I did, and I was sporting the Wisconsin hat as well. Luckily the game was before the gig so I got to see it as well..

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  11. is prone to being frustrated in ways that other ideologies are not.

    FreeDumb!!!!!

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  12. I’m tellin’ ya–it’s gonna be a Big Ten championship. Wisconsin and MSU–I almost feel sorry for the Wildcats and whoever wins the Duke/Gonzaga game.

    Woo hoo!!!!

    P.S. I also won an award with my poster today. Seems to be my day today!!

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  13. Scott, i didn’t read the article and am not going to. Actions have consequences and ideas only have consequences through the actions they guide. Same for emotions.

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  14. Scott,

    He fascinatingly doesn’t address what happens to liberty with an 18 trillion dollar (and growing) debt.

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    • McWing:

      He is a poli-sci professor, not an econ professor. I’m not sure he has considered the implications of the fact that something that can’t continue forever won’t.

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  15. Saying the Roman republic lasted 500 years is not the same as saying individual liberty lasted 500 years.His point seems to be that it’s cool, we’re dying slowly and could, in theory, be reversed. I would disagree fundamentally that death is reversible, as nothing lasts forever. Secondly, existence as a coherent entity wielding power does not a representative republic make.

    Like

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