Bad to worse: US economy shrank more than expected in Q1

The economy is probably in recession now, if one would take in to account what the true inflation rate is, this is a serious decline , perhaps 5-^ percent? - Gary

The U.S. economy contracted at a much steeper pace than previously estimated in the first quarter, but there are indications that growth has since rebounded strongly.

The Commerce Department said on Wednesday gross domestic product fell at a 2.9 percent annual rate, the economy’s worst performance in five years, instead of the 1.0 percent pace it had reported last month.

While the economy’s woes have been largely blamed on an unusually cold winter, the magnitude of the revisions suggest other factors at play beyond the weather. Growth has now been revised down by a total of 3.0 percentage points since the government’s first estimate was published in April, which had the economy expanding at a 0.1 percent rate.

The difference between the second and third estimates was the largest on records going back to 1976, the Commerce Department said. Economists had expected growth to be revised to show it contracting at a 1.7 percent rate. Sharp revisions to GDP numbers are not unusual as the government does not have complete data when it makes its initial and preliminary estimates.

The latest revisions reflect a weaker pace of healthcare spending than previously assumed, which caused a downgrading of the consumer spending estimate. Trade was also a bigger drag on the economy than previously thought. The economy grew at a 2.6 percent pace in the final three months of 2013. With the first quarter in the rear view and the April-June period looking stronger, investors are likely to ignore the report.

Consumer Metric Institute:And lastly, for this report the BEA assumed annualized net aggregate inflation of 1.27%. During the first quarter (i.e., from January through March) the growth rate of the seasonally adjusted CPI-U index published by the Bureau of Labor Statistics (BLS) was over a half percent higher at a 1.80% (annualized) rate, and the price index reported by the Billion Prices Project (BPP -- which arguably reflected the real experiences of American households while recording sharply increasing consumer prices during the first quarter) was over two and a half percent higher at 3.91%. Under reported inflation will result in overly optimistic growth data, and if the BEA's numbers were corrected for inflation using the BLS CPI-U the economy would be reported to be contracting at a -3.51% annualized rate. If we were to use the BPP data to adjust for inflation, the first quarter's contraction rate would have been an horrific -5.62%. 

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Is the Fed distorting everything? The Mises View

Employment Update:Texas Leads the Way

Bloomberg News
Published: 20 June 2014 09:47 AM

Texas still leads the nation in producing jobs. Texas employers added 56,400 jobs in May, the most in the nation, figures from the Labor Department showed today.

Payrolls climbed in 36 U.S. states in May and the unemployment rate fell in 20, showing the labor market continued to strengthen across the nation.

Texas led all gainers followed by Pennsylvania with 24,700 more jobs,  the Labor Department reported.

A total of 383,100 jobs were added in Texas in the past 12 months, making it the largest such job increase in the state in nearly 17 years, the Texas Workforce Commission reported.

The state's seasonally adjusted unemployment rate dropped to 5.1 percent in May, down from 5.2 percent in April.

Lowest Unemployment


Midland, Texas, had the lowest unemployment rate at 2.3 percent, while Yuma, Arizona, had the largest year-over-year unemployment rate decrease in April, with joblessness falling 3 percentage points. 

Highest Unemployment

The Yuma area also had the highest unemployment rate in April at 23.8 percent.

Total US debt soars to nearly $60 trn, foreshadows new recession

America – its government, businesses, and people – are nearly $60 trillion in debt, according to the latest economic data from the St. Louis Federal Reserve. And private debt – not government borrowing – is the biggest reason for the huge deficit.

Total US debt at the end of the first quarter of 2014, on March 31 totaled almost $59.4 trillion – up nearly $500 billion from the end of the fourth quarter of 2013, according to the data. Total debt (the combination of government, business, mortgage, and consumer debt) was $2.2 trillion 40 years ago.

“In 50 short years, debt has gone from being a luxury for a few to a convenience for many to an addiction for most to a disease for all,” James Butler wrote in an Independent Voters Network (IVN)op-ed. “It is a virus that has spread to every aspect of our economy, from a consumer using a credit card to buy a $0.75 candy bar in a vending machine to a government borrowing $17 trillion to keep the lights on.”


According to a 2012 study published in the Economist, rapid growth in private debt is a better predictor of recessions than increases in public debt, growth in money supply, or trade imbalances. Consumer credit in the US rose by 22 percent over the last three years, reaching a record-high $3.18 trillion in April, the Fed reported on Friday.

Credit card use (or revolving credit) rose by $8.8 billion, while non-revolving credit like auto loans and student loans made by the government surged up by $18 billion in April. Non-revolving credit jumped by 8.2 percent over the last year, while revolving credit only rose 2.2 percent over the same time period.

“For a while after the recession it was trendy to cut up your credit cards and get out of debt,” Michael Snyder wrote in an InfoWars op-ed. “But that fad wore off rather quickly, didn't it?”

Snyder noted that 56 percent of all Americans have a subprime credit rating, and that the average monthly car payment in the US is $474. He added that 52 percent of homeowners are overextended on their mortgages and “cannot even afford the house that they are living in right now.”

Debt is hurting young adults the most. Millennials say they are spending at least half their monthly paychecks on paying off debt, a recent Wells Fargo survey found. And two years out of college, half of all graduates are still relying on their parents or other family members for some sort of financial help, according to a University of Arizona study, which also found that only 49 percent of graduates are working full-time.

“Whether or not a weak labor market is increasing the need for intergenerational support — a likely driver in today’s economy — our data clearly showed that many young adults today may not be earning enough to make it on their own, even when working full time,” the report stated.

Most of the debt that young adults face is student loan debt, which totals more than $1.2 trillion, according to the Federal Reserve. Of that debt, approximately $124 billion is more than 90 days delinquent.

“What we have done to our young people is shameful. We have encouraged them to sign up for a lifetime of debt slavery before they even understand what life is all about,” Snyder wrote.

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Putin Advisor Proposes "Anti-Dollar Alliance" To Halt US Aggression Abroad

Zerohedge.com

It has been a while since both Ukraine, and the ongoing Russian response to western sanctions (which set off the great Eurasian axis in motion, pushing China and Russia close together, and accelerating the "Holy Grail" gas deal between the two countries) have made headlines. It is still not clear just why the western media dropped Ukraine coverage like a hot potato, especially since the civil war in Ukraine's Donbas continues to rage and claim dozens of casualties on both sides. Perhaps the audience has simply gotten tired of hearing about mixed chess/checkers game between Putin vs Obama, and instead has reverted to reading the propaganda surrounding just as deadly events in the third war of Iraq in as many decades.

However, "out of sight" may be just what Russia's political elite wants. In fact, as VoR's  Valentin Mândr??escu reports, while the great US spin and distraction machine is focused elsewhere, Russia is already preparing for the next steps. Which brings us to Putin advisor Sergey Glazyev, the same person who in early March was the first to suggest Russia dump US bonds and abandon the dollar in retaliation to US sanctions, a strategy which worked because even as the Kremlin has retained control over Crimea, western sanctions have magically halted (and not only that, but as the Russian central bank just reported, the country's 2014 current account surplus may be as high as $35 billion, up from $33 billion in 2013, and a far cry from some fabricated "$200+ billion" in Russian capital outflows which Mario Draghi was warning about recently). Glazyev was also the person instrumental in pushing the Kremlin to approach China and force the nat gas deal with Beijing which took place not necessarily at the most beneficial terms for Russia.
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For third straight month, China cuts US debt holdings

Jack Freifelder in New York (China Daily USA)

China cut its holdings of United States government debt in April for the third straight month, which may reflect a continuing move from US assets, according to an analyst.

China, the largest foreign holder of US Treasuries, held $1.26 trillion in US debt as of April, down $8.9 billion from the previous month and below the $1.27 trillion mark for the first time since August 2013, the US Treasury Department said Monday in a monthly report. China’s holdings hit a high of $1.317 triillion in November.

Kent Troutman, a research analyst at the Washington-based Peterson Institute for International Economics (PIIE), said the decreases each month could be due to benign shifts in the portfolio.

"April is the first month where there is a larger decrease, but it is still small. What is worth noting, however, is that, even if China’s holdings of US Treasuries are flat, its share of overall foreign exchange reserves is declining," Troutman wrote Monday in an email to China Daily.

"What we’ve seen in the past four months, if we accept that the data accurately reflects China’s true holdings of US assets, is the continuation of a shift that began in 2010 of diversifying their portfolio away from US assets," he said.

Japan remained the second-largest US creditor in April, increasing its debt securities by $9.5 billion to $1.21 trillion.

Foreign demand for US assets strengthened as net foreign purchases of long-term securities totaled $24.2 billion in April, compared to purchases of $4 billion in March, the data showed.


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Silver & Gold - Hidden Secrets Of Money Ep 1 - Currency vs Money - Mike Maloney

Excellent series of videos form Mike Maloney

5 part series 

No Fiat Currency in the history of the world has ever survived!

Do you think the U.S. Dollar will be the first?

19 Ways You’re Wasting Money At The Grocery Store

Are you still spending too much money at the grocery store even with coupons and reading tips on how to save money while shopping?

Maybe that’s because some of your own shopping habits are making you buy more and spend more.

Take a look at our list of bad grocery shopping habits, and get rid of them once and for all!

1. Not checking what’s left in your pantry and fridge. Before you head to the grocery store, do a quick inventory of what’s left in your kitchen. Maybe that half-gallon of milk will last you through the week and you don’t need to buy another gallon after all. Not checking what’s left in your kitchen can make you buy more things than you actually need.

2. Not making a grocery list. Having a grocery list can help you shop faster and, of course, get everything you need. Forgetting to buy something is not only annoying and wastes time, but it also wastes money. When is the last time you went to the store to pick up that one thing you forgot to buy and ended up with a few extra things in your basket?

3. Avoiding crowds and shopping earlier in the week. Shopping on weekends or during busy hours can be really hectic — we get it. But not only do you buy more when you’re leisurely strolling through the aisles, but also retailers put out more coupons and deals during the latter half of the week when they know there will be more customers.

4. Bringing your kids to the store. While grocery shopping might seem like a fun family activity, it’s not helping you save any money. Kids will inevitably beg you for that candy bar or sugary cereal, and you’ll eventually give in.

5. Going to the store hungry. We've all made this mistake. Going to the grocery store hungry is a surefire way to buy things you don’t really need. Try not to shop with your nose, and avoid the freshly baked section if possible.

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