U.S. Economy Shrinks For First Time Since 2011; Pent Demand Suggests Temporary Setback by Jeanna Smialek | Bloomberg | May 29, 2014
Less is more for the U.S. economy, which suffered its first contraction since 2011 last quarter. Gross domestic product fell at a 1 percent annualized rate, worse than the most pessimistic forecast in a Bloomberg survey of economists, revised Commerce Department figures showed today in Washington. The good news: Much of the decline was due to less inventory building that economists say can’t last. As a result, some are boosting second-quarter growth forecasts, with Morgan Stanley projecting a 4.2 percent gain. Stockpiles grew at less than half the pace than in the final three months of 2013, lopping 1.6 percentage points off GDP while businesses cut back on investment. Demand picked up entering the second quarter, giving weight to the Federal Reserve’s view that the economy is recovering. “Inventories are going to be a much smaller drag, and business fixed investment contracted but is probably going to grow in the second quarter,” said Guy Berger, U.S. economist at RBS Securities Inc. in Stamford, Connecticut. What’s more, “the labor market is in good shape and is moving in the right direction,” he said. Spring Warm-up The northern and eastern U.S. experienced above-average snowfall from December through February, keeping Americans closer to home and hampering production as factories had difficulty obtaining materials on time. “Growth in key indicators such as employment, income, and consumer spending have recently begun to
improve from weather-affected levels earlier in the year,” Robert Niblock, the chief executive officer at home-improvement retailer Lowe’s Cos., said on a May 21 earnings call. “Performance has already improved in May, and continued improvement in the macroeconomic landscape and the consumer sentiment” help give the chain a positive outlook in 2014. Stocks rose for the fifth time in six days, driving the Standard & Poor’s 500 Index to a record. The S&P 500 climbed 0.5 percent to 1,920.03 at the close in New York. Companies boosted stockpiles by $49 billion in the first quarter, less than the $111.7 billion in the final three months of 2013. Inventories subtracted the most from GDP since the fourth quarter of 2012. Slower inventory accumulation may encourage factories to step up production should demand accelerate. Demand Outlook Not all economists are convinced it will. While inventories will be less of a drag or contribute to growth, “the only question mark is final demand, which appears to still be firmly on the slow-growth track,” Mark Vitner, senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, wrote in a note to clients. Economists at Morgan Stanley led by Ted Wieseman raised their tracking estimate for second-quarter growth from 3.7 percent. Inventories, they project, will add 1 percentage point to GDP rather than 0.5 percentage point after today’s figures. Final sales adjusted for inflation, or GDP minus inventories, climbed 0.6 percent in the first quarter, the smallest gain in more than a year. Growth Outlook The economy in the second quarter will expand at a 3.5 percent rate, according to the median projection of 72 economists surveyed by Bloomberg from May 2 to May 7. An increase of that magnitude would still leave GDP at an average 1.3 percent in the first six months of the year, less than the average of 2.2 percent in the current expansion that began in mid-2009. Today’s figures showed business investment dropped at a 1.6 percent annualized rate. Companies reduced their spending on structures at a 7.5 percent pace, the biggest decrease in a year. Outlays for equipment fell 3.1 percent, the most since the third quarter 2012. Trade was another soft spot in the first quarter. Exports declined at a 6 percent rate and imports rose as trade in goods and services subtracted 0.95 percentage point from GDP, the most since the second quarter 2010. Consumer purchases, which account for about 70 percent of the economy, increased at a 3.1 percent annualized rate in the first quarter. The gain, which added 2.1 percentage points to GDP, was more than the previous estimate of 3 percent. Services Spending The increase reflected a stronger pace of spending on services, including utilities as colder winter weather prompted Americans to adjust their thermostats. Spending for health care picked up as the provisions of the Affordable Care Act went into effect. Aside from spending on services, consumer demand for goods cooled from the end of 2013,
underscoring the importance of faster job and income growth in spurring the economy. Americans are growing more pessimistic as well, another report showed today. The Bloomberg Consumer Comfort Index fell to 33.3 in the period ended May 25, the lowest since November, from 34.1 the prior week. A measure of personal finances retreated for the third time in four weeks, and a gauge of whether this is a good time to buy goods and services dropped to the lowest point since midFebruary. Today’s report offered a first look at corporate profits. Earnings fell 9.8 percent in the first quarter from the previous three months, the biggest decline since 2008, and declined 3 percent from the same period last year. Price pressures remained muted. A measure of inflation, which is tied to consumer spending and excludes food and energy, climbed at a 1.2 percent annualized rate compared with 1.3 percent in the prior period. The gain was initially estimated at 1.3 percent. The Fed’s goal is for increases around 2 percent in the long run. Today’s estimate was the second of three readings for the quarter, with the final release scheduled for June 25.
The Middle Class Will Die Within 30 Years Leaving “A Wealthy Elite & Sprawling Proletariat” by Zero Hedge | May 29, 2014 If we continue down this path of ignorance, we will be left with a “tiny elite and a huge sprawling proletariat” who have no chance of “clawing their way out of a hand-to-mouth existence,” is the loud and clear message from UK government advisor David Boyle. As The Telegraph reports, Boyle cautions, “we won’t own our own homes, we won’t be able to afford it,” adding that “we cheerled the rise of property prices not realising that it would destroy, if not our own lives, but the lives of our children.” His conclusion, “the middle classes have to wake up to prevent it happening and to create a political movement that will do it.” Authored by Sarah Knapton via The Telegraph, The middle classes will die out within 30 years because of rising property prices, which will rob today’s children of their dreams, an economist has warned. David Boyle, a government advisor and fellow of the New Economics Foundation think-tank, said that youngsters can no longer expect the same level of affluence as their parents. Speaking at the Hay Festival he warned that Britain will be left with a ‘tiny elite and a huge sprawling proletariat’ who have no chance of ‘clawing their way out of a hand-to-mouth existence.’ He predicted that the average house price will reach £1.2 million by 2045, putting a home beyond the range of most people as wages fail to keep up with huge increases. Boyle said that the traditional middle classes will need three or four jobs just to be able to pay soaring rents. People will no longer have the space or time to pursue cultural interested.
And he blamed bankers bonuses for artificially inflating the property market. “The really scary thing is if in the next 30 years house prices rise as much as they have done in the last 30 years then the average house in Britain will cost £1.2 million,” he said. “We cheerled the rise of property prices not realising that it would destroy, if not our own lives, but the lives of our children. “The place where this is heading is a strange society with a tiny elite and a long struggling, straggling line which is the rest of us, a new proletariat, who will be in hock to Landlord PLC. “We won’t own our own homes, we won’t be able to afford it. “It will constrain our dreams and constrain the dreams of our children. It’s a new kind of economy where there are no middle classes at all. “Nobody in society will have the kind of space in their lives, space in their homes, space in their careers for any kind of culture at all, because we will be having three or four jobs to make ends meet “I think will impoverish society make it more intolerant and make it more difficult to live.” Boyle claimed that one of the major problems was Margaret Thatcher abandoning The Supplementary Special Deposit Scheme, known as the ‘corset’ which limited how much banks could lend for mortgages. Although the scheme kept house prices low in the 1970s, Boyle said it was unlikely that today’s buyers would accept having to wait for months for a mortgage. Instead, he suggests a ‘parallel’ housing market were new homes were sold at the initial price for 100 years. He predicted that without such a radical solution, mortgages will be inherited and only be paid off by the grandchildren of the original buyer. “We were rationing mortgages in the 1970s, that’s what kept prices low and I don’t know if we will accept a time again when you have to wait,” he said. Boyle said the rise in Ukip was fuelled by disaffection of the middle classes. “You saw this huge revolt. I think what happens when you suppress the dreams of the middle classes is you get rather peculiar and very dangerous political movements beginning to emerge,” he argued. “That doesn’t forgive people voting in the neo-facists but it does somehow explain it. “Very unequal societies are very inflationary societies and in the end it drives out those other degrees in society until it becomes very flat and very desperate. “The middle classes have to wake up to prevent it happening and to create a political movement that
will do it. I don’t think Ukip is it. “You could say that it doesn’t matter and that a more classless society would be a good thing. “I think if there is no place in the middle that anywhere can go to claw their way out of desperate hand to mouth existence, and the precariat, then that condemns us all to a precarious existence because there is no ladder.”
Damming New Evidence Showing How Obama Is Supplying Weapons To Terrorist In Middle East by Tyler Durden on 05/28/2014
As we noted yesterday, President Obama is saying he is contemplating arming and training Syrian rebels (just the 'moderates' which will be identified by their smiles). However, as the following PBS Frontline documentary exposes, the Syrian rebels themselves say they are already armed and trained by US in the use of sophisticated weapons and fighting techniques, including, one rebel said, "how to finish off soldiers still alive after an ambush." The interviews are the latest evidence that after more than three years of warfare, the United States has stepped up the provision of lethal aid to the rebels, as PBS notes "it appears the Obama administration is allowing select groups of rebels to receive US-made anti-tank missiles." So who is lying? Obama (again) or the Syrian rebels (who show US-made supplies in the following clips). The whole interview is noteworthy and damning for the administration but the good stuff starts around 8:00 Syria Arming the Rebels FRONTLINE PBS VIDEO BELOW http://www.youtube.com/watch?v=022q7iN8aXU The documentary, produced by FRONTLINE for airing on PBS stations, features journalist Muhammad Ali, who has been following the Syrian civil war for the program. It shows Ali meeting up
with a seemingly moderate faction of the rebels, though the faction itself is not identified — apparently for fear of angering its American contacts.
Ali is shown riding with a rebel supply officer as he traveled to the Turkish border to reportedly pick up American-supplied Russian weapons and ammunition, but he is not allowed to accompany the fighters to the actual meeting.
The commander of the unit also told Ali that their American contacts had asked him to bring 80 to 90 members of his unit to Ankara for training.
One of the fighters said they received three weeks of training in how to conduct ambushes, conduct raids and use their weapons. They also said they received new uniforms and boots.
“They trained us to ambush regime or enemy vehicles and cut off the road,” said the fighter, who is identified only as “Hussein.” “They also trained us on how to attack a vehicle, raid it, retrieve information or weapons and munitions, and how to finish off soldiers still alive after an ambush.”
The United States has refused to confirm its growing efforts to help the fighters. Neither the Pentagon nor the CIA would comment on Frontline’s findings.
For the United States, publicly embracing such an effort presents many challenges, chief among them widespread opposition among U.S. voters for more direct U.S. involvement in the Syrian conflict. Perhaps because of those reasons, Congress has never publicly signed off on funding for a training and arming effort, and officially, the United States only provides non-lethal aid, like food rations, clothing and first aid supplies. Of course, we are sure anyone from the government looking into this will be shocked and not have a clue how it could have happened... who is responsible for the decision... and who is funding it... once again we ask... who is lying?
INFOWARS.COM BECAUSE THERE'S A WAR ON FOR YOUR MIND