We recently posted on a report from CNBC which showed that government GDP numbers are often very wrong. In fact 1/3 of the time the government is wrong even on whether the economy is contracting or expanding. That’s pretty darn wrong.
On Friday, the US government’s Bureau of Economic Analysis had some good and some not so good news: the good news was that the final estimate of Q4 GDP was revised higher from 1.0% to 1.4% (driven by an odd rebound in spending on Transportation and Recreational services). The bad news was that pre-tax earnings tumbled 7.8%, the most since the first quarter of 2011, after a 1.6 percent decrease in the previous three months, suggesting that with corporate profitability crashing, it is only the “strong” US consumer that is keeping the US economy afloat.
Unfortunately moments ago we got a revised glimpse of the true state of the US consumer, and it was anything but strong.