The Humiliation Continues: Days After Hiking Its Q2 GDP Forecast To 3.9%, Goldman Cuts It To 3.5%

When it comes to the Goldman team of crack freaconopenguins the fun never ends.

It was just last Friday when we reported that “Humiliated On Its Q1 GDP Prediction, Goldman Doubles Down, Boosts Q2 Forecast To 3.9%.”

The primary catalyst revealed by Goldman, which previously had a 3.0% Q1 GDP forecast before it cut it to -0.5%, was that “Consumer spending will probably grow strongly. Q1 consumer spending rose at a solid pace, but on fairly low quality composition. Higher utilities spending due to colder weather and Affordable Care Act-related healthcare spending accounted for the majority of growth. However, the trajectory of spending heading into Q2 was positive, as March core retail sales rose a strong 0.8% and we forecast a solid 0.5% gain in April based on data currently in hand.” Oops. So much for the “positive trajectory” following today’s abysmal retail sales report which actually saw the control group print negative!

Sure enough, moments ago Goldman just cut its just recently boosted Q2 GDP from 3.9% to 3.5% – the first of many such cuts.

BOTTOM LINE: April retail sales were a substantial disappointment, although upward revisions to March helped soften the surprise. Separately, import prices were lower than expected in April, reflecting declines in both food and energy prices. We reduced our Q2 GDP tracking estimate by four-tenths to 3.5%, and increased our Q1 past-quarter tracking estimate by two-tenths to -0.3%.

 

1. Retail sales rose 0.1% in April (vs. consensus +0.4%). Core retail sales edged down 0.1% (vs. consensus +0.5%), with notable declines in electronics (-2.3%), miscellaneous (-2.3%), and nonstore retailers (-0.9%). (Miscellaneous retailers include office supply and stationary stores, while the nonstore category mainly represents online sales.) Outside of the core, motor vehicle sales increased a bit (+0.6%) despite the decline in unit auto sales reported by dealers on the month. Gasoline station sales rose (+0.8%), likely due to higher selling prices, while building material sales increased 0.4% amid better weather. Although April retail sales were disappointing, headline retail sales in March were revised up four-tenths to 1.5% and core retail sales were revised up five-tenths to 1.3%.

 

2. Import prices fell 0.4% (vs. consensus +0.3%) in April. Food and beverage import prices fell 0.7% in April, and petroleum prices also fell 0.7%. Excluding food and fuels, import prices rose a modest 0.1% in April. Over the past year, import prices declined 0.3%, while ex-food and fuel import prices fell 1.0%, representing a net drag on core consumer price inflation.

 

3. Based on this morning’s retail sales report, we reduced our Q2 GDP tracking estimate by four-tenths to 3.5%, and increased our Q1 past-quarter tracking estimate by two-tenths to -0.3%.

It would be pathetic if it wasn’t so… never mind. It is absolutely pathetic. However, it would be excusable if at least Tom Stolper was making the reco. Sadly, we have to wait until he ends up at his next position before we fade him with the full faith and credit of epic idiocy.




via Zero Hedge http://ift.tt/1lsDquc Tyler Durden

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