Gov’t Revises Q2 GDP Growth By 61 Percent To 3.7 Percent (But Q3 Is Forecast To Be Only 1.4 Percent)

The preliminary US Q2 GDP read was 2.3%. This matched the Atlanta Fed’s NOW estimate of 2.3%.

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Suddenly, the US government revises Q2 GDP by 61% to 3.7%.

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All 4 major categories were increased.

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The problem is that the Atlanta Fed’s GDP Forecast for Q3 is down at 1.4%.

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Talk about volatility! But not in wage growth.

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And gross domestic INCOME is falling.

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Tpday’s GDP revision is known as an alley-oop.

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Strange Days! Dow Opens Over 300 Points, Closes Down 250 Points (US Treasury 10Y Yields Rise)

Strange days indeed. Another cliffhanger on Wall Street with the DJIA rising to over 350 points after opening, only to crash to -250 points by closing.

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The decline in the Dow is even more noticeable over a 1 year window.

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The VIX measure of S&P500 volatility exploded over the past few sessions.

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What happened? Crude oil futures prices declined yesterday, but rallied this morning. Then, started going down again.

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US Treasury 10 year yields rose over 8 basis points. It isn’t helping that Lockhart of the Atlanta Fed and others are hinting about a rate increase in September.

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Strange days!

Case-Shiller Home Price Index Falls -0.12 Percent (SA) For June (Home Price Growth Remains 2x Wage Growth)

The S&P Case-Shiller Home Price index fell 0.12% in June on a seasonally adjusted basis.

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On a non seasonally adjusted basis, the Case-Shiller index rose by 0.09% MoM and 4.49% YoY.

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Home Price Growth remains >2x average wage growth.

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The Dude must find his rent skyrocketing in Venice, California.

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Simply Unaffordable: Renting In The USA Is The Most Expensive In History (San Francisco Leads Nation)

Living in the USA has never been less affordable, according to Zillow.

Americans living in rentals spent almost a third of their incomes on housing in the second quarter, the highest share in recent history.

Rental affordability has steadily worsened, according to a new report from Zillow, which tracked data going back to 1979. A renter making the median income in the U.S. spent 30.2 percent of her income on a median-priced apartment in the second quarter, compared with 29.5 percent a year earlier. The long-term average, from 1985 to 1999, was 24.4 percent.

Rental affordability worsened from a year earlier in 28 of the 35 largest metropolitan areas covered by Zillow. Rents were least affordable in Los Angeles, where residents devoted 49 percent of monthly income to rent. The share in San Francisco was 47 percent, 45 percent in Miami, and 41 percent in the New York metro area.

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This is not that surprising when you consider that the CPI Urban Consumers Owners Equivalent Rent of Residences is growing at a slower pace YoY than average wage growth.

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And homeownership rates keep on falling.

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Effective rent growth has been climbing but is expected to decline in 2016.

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San Francisco leads the nation in effective rent growth for 2015 with Oakland, Seattle and New York following closely.

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Simply unaffordable.

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Fed: Q3 GDP Forecast Slumps To 0.7 Percent Growth (Will The Fed STILL Raise Rates??)

Well, ain’t this a kick in the head! The Atlanta Fed forecasts only 0.7% growth in Q3.

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2015 was 0.7 percent on August 13, down from 0.9 percent on August 6. The previously reported nowcast of 1.0 percent for August 6 was revised down due to a minor adjustment in the method for nowcasting investment in computers and peripherals. Since a week ago, the nowcast for the contribution of inventory investment to third-quarter real GDP growth has declined from -1.8 percentage points to -2.2 percentage points. This decline more than offset an increase in the nowcast of the third-quarter growth rate in real consumer spending from 2.9 percent to 3.1 percent after the release of this morning’s retail sales report from the U.S. Census Bureau.

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The breakdown:

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Given China’s devaluation of their currency and French-like economic growth, will The Fed still raises rates??

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Expected Household Spending Tanks (Dude, Where’s Our Recovery?)

According to the New York Federal Reserve, expectations for household spending just tanked.

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At the same time, Fed Vice Chair Stanley Fischer and Atlanta Fed’s Dennis Lockhart are warning that an interest rate increase is imminent because the US is at (or near) full employment and economic growth is “solid.”

Yes, I see. U6 UNDERemployment is now the same as the worst reading during the last decade while both average wage growth and real median household income are lower.

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So dudes, where’s our recovery?

ZOLTAN!

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Summertime Blues: Copper, Oil, Lumber, Foodstuffs Have All Declined Since August 2014

Much attention has been focused on collapsing oil prices, such as West Texas Intermediate Crude Oil. But since August 2014, other important commodities have been crushed in terms of price: lumber, copper and food stuffs.

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Not only are important commodities in a state of decline, so is another important factor: teen employment. Teen employment as measured by labor force participation for the 16-19 age bracket is falling faster than a paralyzed falcon.

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And it’s not so good for those aged 25-34 either.

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One of the reasons for the commodity slump? China.

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It is indeed the “Summertime Blues.”