CONSUMER WEAKNESS CONTINUES TO DRAG ECONOMY DOWN: IT’S HOUSING STUPID!

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EDITOR’S COMMENT: How in the world can anyone say that weakness is consumer spending is surprise. we all know they have no money, no credit and bleak prospects in the job market. Where’s the surprise?

A Weak Consumer Weighed on Growth in the First Quarter

By REUTERS

WASHINGTON (Reuters) — Unexpectedly weak consumer spending hobbled the nation’s economy in the first quarter and fresh signs of a slowdown in the labor market pointed to a continuing struggle for the recovery.

The economy grew at an annual 1.8 percent rate in the first three months of this year, the Commerce Department said on Thursday, unchanged from an earlier estimate and weaker than most forecasts.

A separate report from the Labor Department showed the number of Americans claiming unemployment benefits unexpectedly rose last week by 10,000, to 424,000.

Some of the slowdown in growth was linked to bad weather in early 2011 and an 11.7 percent decline in defense spending.

Economists were cautious about forecasting a rebound in the second quarter, citing the rise in jobless claims and a moderation in factory output, which has been hit by disruptions to supply chains after the March earthquake in Japan.

“The second-quarter rebound is likely to be muted,” said Nigel Gault, chief United States economist at IHS Global Insight in Lexington, Mass.

The economy expanded at a 3.1 percent rate in the October-December period. Economists had expected the first-quarter pace to be revised up to 2.1 percent.

The economy has expanded for seven straight quarters, but growth has been tepid by historical standards, leaving both the Obama administration and opposition Republicans scrambling for ideas to put it on a faster track.

Consumer spending, which accounts for more than two-thirds of the nation’s economic activity, expanded at a 2.2 percent rate in the first three months of this year, slower than the previously reported 2.7 percent.

After rising at a 4 percent clip in the fourth quarter, spending in the first quarter was slowed by high food and gasoline prices, which pushed inflation to its fastest pace in two and a half years.

The personal consumption expenditures price index rose at an unrevised 3.8 percent rate in the first quarter. That compared with the fourth quarter’s 1.7 percent increase. The core index, which is closely watched by the Federal Reserve, advanced at a 1.4 percent rate, the quickest rate since the fourth quarter of 2009.

Fed officials would like to see this measure close to 2 percent. The lower rate suggests that the central bank will be in no hurry to raise interest rates once it concludes its $600 billion, government bond-buying program in June, analysts said.

“This may put off the day where the Fed starts normalizing interest rates until even further down the road,” said Chris Rupkey, chief financial economist at the Bank of Tokyo-Mitsubishi UFJ in New York. “The Fed is going to want to see G.D.P. above 3 percent certainly before taking their foot off the gas.”

Although consumer spending pulled back in the first quarter, economists hope a recent drop in gas and food prices will ease the pressure on household budgets.

The soft consumer spending overshadowed a $52.2 billion increase in business inventories, which was well above the initially reported $43.8 billion rise.

But a decline in vehicle production so far in this quarter because of shortages of parts from Japan could cause a drawdown in inventories and weigh on growth in the April-June period.

Motor vehicle output added 1.28 percentage points to first-quarter G.D.P.

The G.D.P. report also showed after-tax corporate profit fell at a rate of 0.9 percent in the first-quarter after rising at a 3.3 percent pace in the fourth quarter.

The drop in profit, the first since the fourth quarter of 2008, likely reflected a slowdown in productivity growth as businesses stepped up hiring. Economists had expected corporate profit to grow at a 2.3 percent pace.

14 Responses

  1. Finally the Banks are getting squeezed on all sides…

    I am working with a producer in Hollywood on a under ground documentary called

    “Smoke and MERS”

    its about foreclosure Fraud, robo, BS, etc?

    The Producers are looking for homeowners who want to tell their story …

    If interested email me uprootedone@gmail.com

  2. Credit Suisse, Merrill Fined $7.5M For Subprime Wrongs

    The Financial Industry Regulatory Authority announced Thursday it had fined Credit Suisse Securities (USA) LLC and Merrill Lynch a combined $7.5 million for misrepresentation of delinquency data and inadequate supervision in issuing subprime residential mortgage-backed securities.

  3. To Clarify. Our constitution respects the Human Spirit. Unlike the European Monarchs etc… we all left.

    That is also why people from all over the world run can also relate to this Country. No matter what religion or non religion.

  4. This is also why I use the example of the Pharoah’s They thought that they were above the law of Nature.

    I could also use the Aztecs, Mayans, Romans, Greek, Persians, Nazi, Soviet Russia, or any of us.

    So when you go against the Law of G-d or Nature or whatever you want to call it no matter who or what you are. History (not religion) has taught us that you are destined to distruct.

    This is the beauty of our Constitution. So we must follow the constitution of the United States.

    NOBODY IS PERFECT.

    NEVER AGAIN

  5. It can’t go on even if we want to help the Banksters, or the United States.

    Thank you Anonymous.

    There is what is called the Law of Diminishing Return. (That is why we have or had anti trust laws)

    So Too big too fail is what is killing us.

    Anonymous was correct when he answered me a while ago that the Bankster Fed or whatever disregarded this law.

    Well this is a law that like Gravity cannot be disregarded.

    It can temporarily be manipulated (gravity and law of diminishing return) but not in the long or medium term.

    So even if I wanted to help, I or all of us can not help.

    Thati is why Tyranny Fascism Communism Slavery does not work.

    There are two elements the Banksters and Oil People do not put in their equation. The Human Spirit.

    NEVER AGAIN.

  6. The A Man

    Agree. Quote — ” Delaying the inevitable. The Collapse of the to big to fail banks.”

    The original goal was to blame the homeowner — We will not be scapegoats to help prevent the inevitable.

    Let them figure out another way to save the US. Not on our backs. The inevitable — is the inevitable.

  7. As long as the giant corporations run the government, this krap will go on. No more corporate welfare. Tax the corporations and make them pay. Cut the military budget. It is triple what it was ten years ago. Tax the wealthy. What is really weird about that is they, the wealthy, agree that they should pay more tax. Do those three things, and the deficit will go away.

  8. Like I said it is not only us. Dont forget alot of these workers owned houses or still do.

    http://www.huffingtonpost.com/2011/05/28/grocery-store-workers-hunger-minneapolis-minnesota-cub-foods_n_868195.html

  9. “Asked about the fate of the economic “recovery”, which incidentally is nothing more than a $2 trillion dollar dilution-funded blip on the depressionary downtrend commenced in December 2007, Greg Peters, the head of fixed income research, at Morgan Stanley, the firm whose other fixed income strategist Jim Caron will now have been proven wrong three years in a row following his annual broadly bullish call for a jump in rates (not based on bearish considerations such as those postulated by Bill Gross… bullish), tells Tom Keene that the recovery is “Too Young To Die.” Yep. That’s the justification. Alas there was no mention that the 98 year old ponzi scheme perpetrated by the Fed since 1913 is now “Too Obvious To All.”

    http://www.zerohedge.com/article/step-aside-too-big-fail-morgan-stanley-calls-recovery-too-young-die#comments

    P.S. Make sure to read the comments – hilarious, but all too true.

  10. Another thing people are pissed not only homeowners.
    People dont have food to feed their families.

    the WE ACCEPT EBT (FOOD DEBIT CARDS) SIGNS are seen all over Los Angeles.in

    small markets
    Jack in the Box
    7-11
    Burger King
    Liquor Stores
    Every where.

  11. Everybody is buying time. Delaying the inevitable. The Collapse of the to big to fail banks.

    Or hopefully the reconfiguration of the banking system before it is too late.

    Too Big Too Fail is UnAmerican. It goes against the Laws of Nature It goes against the fiber Soul of this Country. It is gonna fail. The question is when.

    Too Big Too Fail is a communist concept. Centralized Control. It doesnt work.

    It is funny (SAD) we beat the Soviet Union and Red China (is now more capitalistic than the United States) only to become like them. Read Animal Farm or watch the movie written by George Orwell

    NEVER AGAIN
    WE SHALL OVERCOME

    This country has beaten many enemies of Freedom.

  12. Enough already:

    You said this from the heart. And yes, you have it exactly right. You have inspired me this morning.

    The banks who chose the loan programs to sell to the American people and then having underwriters come in and approve the funding of the loan based on loan programs that have no place in our society, but ended up touching every part of our being: jobs, private investment through profit sharing plans and retirement funds, emotional distress, loss of family, broken communities, food banks, and the rule of law, and the list goes on and on. ” In the hands of a few, go the rewards of many, all on the backs of the American people”. There are many of us who understand what that means, but not enough.

    Producing a product for Wall Street and Fannie and Freddie was the name of the game and the banks and originating lenders didn’t care how they came up with it. There was money to be made and continues to be made as the American people are taken to the slaughterhouse. Are we going to continue to stand for this kind of treatment or are we going to begin the process that will peacefully take our country back. This does not have to become a hostile attempt to force the banks to do that which is right for the people, but it will be an affirmative stand by all Americans because without it, those that created this fiasco and so harmed their brother, most assuredly will continue to do so.

    It is clear that the Administration, the Congress and Wall Street do not know at this point what to do, and so it goes with the American people. So more time is bought by the AG’s with a few phony settlements which do nothing for the homeowners. a Congress that is afraid to touch the subject, and so many Courts that did not have a clue while they heeded the wims of the lenders and almost destroyed any justice for the people. But it is not too late if all Americans will do the right thing. Take action.

    Did I see Goliath out there? Yes, I believe he is there. So, people, what are you waiting for?

    The sad part of t his whole picture is that even after so many homebuyers were victimized, that the homeowners who fortunately were not, are not standing by those that were and bought into the story for the first several years that it was the dead beat homeowner that caused this demise, and with that mindset, they actually paved the way for the path we now find ourselves on, but they just didn’t get it soon enough. They were in effect, a vote for the banks and the loss of the rule of law. This of course will come back to haunt the American people if we do not get it turned around. When the fog clears, we will know for sure.

    While it is clear that a small percentage of the loans made were made with the homebuyer working falsely and made loans they knew they were not able to repay, most home buyers did not. However, for the most part, millions not really understanding what was going on, signed the papers with the trust that the lender was honest and forthright.

    The American people – 75% – have deserted those homeowners that have now become the victims of the banks. I thought this morning as I watched a poll on Fox news that said 68% of the people still believe in the American Dream – Does anyone want to define what the “American Dream” is now. This tells me, America you don’t get it.

    The banks now have an opportunity to correct the issue to try to regain the trust the American people once had for them – but as you can see, they are fighting to the finish to provide so little compensation for all that they created, both nationally and globally to those that were harmed which would in effect work to the good of straightening out the title issues, court issues and of course – give us back the rule of law.

    Everytime I hear someone mention the $150 Billion to Fannie and Freddie and I equate that with the $17B now being offered to the American people, I don’t know how anyone could accept such further victimization of the people.

    There are those of us still out there that intend to bring about a good resolution that will put the housing crisis behind us – Everyone will not be happy, but it may end up being the best that it can be under the circumstances and without the help of the AG’s, the Congress and the Administration and its regulatory.

    The deal will be between the Banks and the American people – The government needs to step aside as do the AG’s. The best news I heard today is that the 50 State Attorney Generals are basically coming to a parting of the ways –

    Now the American people, state by state can step in and begin that which they should have done four years ago, but simply could not or would not take the time to make the call for what must be done.

    It is obvious that the the campaign of those running for President will not reveal or permit any discussions regarding the housing crisis. Once the housing demise begins to deminish, the jobs will become a reality – how many people have tried to tell the Administration who concentrated on health care – first the Obama adminishtration for two years and now the REpublicans have picked up the torch. Ryan’s plan is good and will not be forgotten – it is a bench mark and the American people need to demand that the “whole story” be revealed from both sides –

    Like the housing issue, the health issue is taking the same path – get it off the table before the campaign gets in high gear.

    The seniors need to step up on behalf of the generations to come as their part in making a mark for America – Well, come on seniors.

    And the rest of the American people need to follow.

    The banks can make this work – we are not waiting any longer for them to step up and help us make it happen – and sooner rather than later.

    This is simple talk from someone who cares about this country – just like you do. We must put the people’s plan/proposal on the table without any interference from the Feds and we need a strategy to pull it off.

    But everyone that comes to this site TODAY, look for more of the same – talk, talk, talk – we have good knowledgeable people who can take up the cause to help those of us not organizaed sufficiently to bring it to fruition – WHY?

    Thank you for your time.

  13. welll think about this forecloure mess is it on our locaal tv stations no is it in our local news papers ????we had one story yesterday in st pete times about a guy given 44 years for mortgage fraud. paying straw buyers and flipping houses. who actually approved the mortgages should also have been fined and jailed. these sales skewed our appraisals and caused this mess. the continuing of approving mortgages with our the appraisals being examined for irregularities. if i am trying to buy a single family home in the area and a home sold that was built a while ago for 245k and then there was another home bought for 238 in march and the sold again in october for 280. which comp do you use and which gets striked?? this was in my appraisal.. my question is how did the house get appraised for that 280k. see i want to investigate that appraisal. the banks that was the job of the under writer to check appriasals for accuracy but if we another scam going on at the same time all the checks and balances were not there and the homeowners got scrood. we all know from a fact the appraisers were being blackballed if they did not come in at or above peoperty value. so including these flipped homes was the key. they should have been strikes by underwriting as an anomaly but they werent. and now my falsley appraised house is 140k underwater. whose responsibility is the difference? bit pam bondi feels it is a moral hazard to give defaulting homeowners a principle reduction? i am notg etting it. we did nothing wrong but ask the bank for helo because of hard economic times. wells fargo told me to stop paying. now we all know about derivatives and CDS’s now we know why they told us to stop paying.

    well everyone we have been scamed and it is overthey got as much money as they can out of us and the jig is up. it is getting out there little by little. that you can not have us sign a contract and not explain what our signiture does. the signiture on the note creates money. the bank never had any money to loan, the signiture creates money to securitize the mortgage and sell derivitives and cdo”. telling us that they are going to bet on our mortgages that they are going to fail is like telling your mom on your thst your little brother staying up late and if you tell on him you will have to go to bed earlier with him. why would the banks tell us this? but that was fraud not explainign what was happening. would some of us agree , yes prob. would we have been given a chance to get a loan from a credit union or local bank probably. were we given that choice at all no…..have we lost our entire investment to help us through retirement yes we have. now pam bindi THAT IS THE MORAL HAZARD

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