US Q2 Real GDP Adjusted Upwards To 4.2% (PCE Up Only 2.5% But Durable Goods Up 14.3%, Fixed Investment Up 17.5%)

The Bureau of Economic Analysis (BEA) has released their adjustment to the Q2 GDP report of 4.0%. It has been revised upward to 4.2%! Just in the nick of time too since the midyear elections are just around the corner!

Here is an interesting piece of information. Personal Consumption Expenditures (typically about 70% of GDP) rose by only 2.5%. But Durable Goods Expenditures rose by 14.3%, the largest increase since 2009. Lots of aircraft orders for Boeing!

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Fixed investment rose 17.5% in Q2, the largest increase since Q4 2011.

Although not in the GDP report, real wage growth is 0%. That is correct. NO WAGE GROWTH!

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So, Personal Consumption Growth rose only 2.5%, but Durable Good Expenditures rose by 14.3% and fixed investment rose by 17.5% with NO REAL WAGE GROWTH.

The reaction in the bond markets? US Treasury 10 year yield dropped to 2.330%.

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The BEA spokesman announcing the Q2 GDP revision and sees nothing but untapped economic potential.

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Japan Sinks Into the Abenomics Abyss (Debt to GDP at 226%, Q2 GDP Likely to Fall 5%, House Prices Continue to Fall)

Japan faces severe economic problems. An aging population, swelling pension liabilities and staggering debt. Japan’s debt as a percentage of GDP stands at 226%!

The problem facing Japan’s Prime Minister Shinz┼Ź Abe is that the continued run-up of government debt has done virtually nothing to grow real GDP QoQ.

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And Q2 2014 GDP growth is likely to print at -5%.

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The NOWCAST model forecasts a 10% drop in Q2.

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Whether it is -5% or -10%, Japan’s experiment with Abenomics and massive debt expansion is failing.

Throw in the continued decline of house prices, and Tokyo, we have a problem.

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The Great Abenomics hopium turned out to be the same big borrow and spend lunacy that has Europe caught in a bear trap.