Resilient Shale Producers Get Their Second Wind

But the world economy is weak, at best.

​More below.

U.S. Economy Expands to 0.5% Pace, Weakest in Two Years

. . . no matter what the economy bulls say, it's no boom, and closer to recession than they want to admit. 

"The U.S. economy expanded in the first quarter at the slowest pace in two years as American consumers reined in spending and companies tightened their belts in response to weak global financial conditions and a plunge in oil prices.

Gross domestic product rose at a 0.5 percent annualized rate after a 1.4 percent fourth-quarter advance, Commerce Department data showed Thursday. The increase was less than the 0.7 percent median projection in a Bloomberg survey and marked the third straight disappointing start to a year."

That 4th quarter 1.4% "boom" was driven by subprime auto loans, and another housing flight. While you might not want to reprise the Great Recession, the federal government does, and is trying its best to get us there. Thanks, Bammy!

"Spending, while slightly better than the 1.7 percent median forecast, was a disappointment in light of the consumer-friendly fundamentals including low gasoline prices, cheap borrowing costs, increased hiring and warmer-than-usual winter weather.

“The first quarter is going to be the worst quarter for consumption for all of 2016,” said Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC in New York. “With financial markets calming down and retracing all of their losses, the fundamental factors that have driven consumption will continue to do so.'"

This is more prayer than reality. The wankers have been wrong for the past, well, forever. The chances they are getting it right now are minimal. But perhaps Oubina is correct, or we are diving into a new recession. I still can go either way on this.

The GDPNow is banging about at 0.6%, so there is confirmation. 

GDPNow Forecast Rises to 0.6% as Trade Deficit Narrows | MishTalk

It looks like consumer demand is tanking. 

"Subtracting from GDP vs Last Quarter

Nonresidential fixed investment
Private inventory investment
Exports
Federal government spending
Imports
Adding to GDP

Personal consumption expenditures (PCE)
Residential fixed investment
State and local government spending
PCE (consumer spending) added to GDP but is decelerating.

Economists’ Estimate 0.7%

The Bloomberg Economy consensus estimate was 0.7% in a range of 0.1% to 1.1%."

I am sorry but the Economic consensus has been wrong on the high side for a while now. We are faced with a decelerating economy, especially consumers. The auto situation has collapsed, and we are left with housing being the only thing between a flat dead economy at zero growth, and recession. I get the feeling we are slowly backing into a new recession after 7-1/2 exhausting years of fighting against the Obama Administration's attempts to regulate businesses out of existence. 

Cross you fingers, and hope the dithering dunce from Chicago is too distracted by the good weather, and the golf game to muck about in the economy, or do more damage to business. Otherwise we are probably in for a European Sucking Recession. And that would be bad indeed.

MaxedOutMama: Comments, Possibly Ill-Advised.

Well, maybe. MOM does her usual bang up job of parsing mountains of data to provide us with something usable. MOM's takeaway is recession, but not the usual Recession American style, but Recession Euro style. This would be bad. European recessions are long slow, and damaging. 

As you may recall, I have had a heck of a time accepting that the data is showing a recession. I suspect MOM is correct that the data does not look right, it looks weak, but not actually classic for an American recession. This is especially confusing as the employment data looks quite positive. Her takeaway from that is the employment data is simply wrong. On that I will have to take her word. I simply don't know how to parse this data, but her assumption of a European recession answers many questions.

You need to read the entire thing. It is a bit "inside baseball" but seeing the data displayed, and analyzed is worthwhile. 

The new subprime lending problems are a bit shocking. It seems our political class really is totally incompetent. Subprime is one of the primary drivers of the 2008 recession, why anyone would want a mulligan on that is unfathomable, leave it to our lack-lusterless President to find that sweet spot. 

Perhaps another problem I am having is that Oregon is traditionally early into recessions, and late out. If we are not in, it can't be a recession. However, Oregon's economic mix has changes radically since I first moved here in 1972. I might be reading the economic conditions here with old eyes. This is something I try very hard to avoid but it is a common bias.

Anyway, this is one more mark for expecting a recession, and planning accordingly. 

I am still on the fence, I expect the chance of a recession is still in the 40-45% range, far greater than the Blue Chip economists estimate, and less than the MOM, and Mish estimates. It's the best I got right now.

Here are a few Mish links:

Factory Orders Dive 1.7%, Core Capital Goods Dip 2.5%, Last Month Revised Lower | MishTalk

GDPNow Forecast Sinks to 0.4% Following More Weak Economic Report | MishTalk