Negative 2.9

 "Real gross domestic product...decreased at an annual rate of 2.9 percent in the first quarter of 2014 according to the 'third' [the first estimate was a 0.1% growth and the second estimate was a 1% contraction] estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2013, real GDP increased 2.6 percent."  CNBC put a positive spin on the news: "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." Hopefully, that pans out. The dismal growth had been largely blamed on the weather. The weather almost certainly did have some impact of the the economy (I know that in Atlanta the city was shut down for several days), but CNBC points out that "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". It is also interesting that this was the largest difference between the 2nd and 3rd estimate since 1976.

The economist John Williams posits that the GDP number put out by the BEA are significantly off due to the massive underestimation of inflation. John Williams provides an alternative measure of inflation and GDP numbers that uses the methodology that the government used before they made all of the changes in the 1990s to make inflation appear lower. Using these numbers inflation is around 8% and the GDP has been bottom bouncing after the sharp downturn in the 2008 recession.

The Federal Reserve has continued to taper, down from 85 billion a month to 35 billion a month. The market expects the Fed to end QE by the end of the year. The market also believes that the economy is picking up and is gradually getting better. Although QE might not end if the economy continues to contract. It is interesting that the economy started to contract when the Fed started to taper at the beginning of the year. To put the "end" of QE into perspective, you need to put the latest rounds of QE into the broader context of all of the QE programs: the Fed launched and ended QE 1, QE 2, and operation twist(?) while QE 3&4 are in the process of being "ended". Considering all the QE programs as one large program, QE has not ended since 2008.  It is also better to think of QE as monetizing the debt as opposed to the euphemism QE. (What has happened to the debt that the Fed stopped buying?  Maybe the ECB is picking up the slack for the Fed. The Fed did help bail out Europe.) Speaking of Europe, the ECB has launched NIRP or negative interest rate policy and is expected to launch QE in the not-too-distant-future.

The Latest Epic War Movie

From MAD magazine.  Way to go Obama!