US economic growth grinds to a halt in first quarter

Andre Damon
RINF Alternative News
The US economy grew at an annual rate of just 0.1 percent in the first quarter of this year, according to data released Wednesday by the Commerce Department. This was the second-worst quarterly growth rate since the 2008 financial crash, and significantly below the 1.1 percent rate predicted by aWall Street Journal survey of economists.
The figure points to the fundamental reality that nearly six years after the eruption of the world economic crisis, the US economy remains mired in slump. Since 2008, the US economy has had an average annual growth rate of just 1.1 percent, compared with an average rate of 3.3 percent for the entire post-World War II period.
Exports plunged by an annualized rate of 7.6 percent, the sharpest fall since the 2008 crisis, according to the report. Business spending on buildings and equipment fell by 5.5 percent. Consumer spending on goods fell by 0.4 percent.
These declines were partially offset by a spike in spending on utilities, attributable to the very cold winter, and increased health care spending. The latter was largely due to an increase in the number of people paying health insurance premiums as a result of the implementation of the Obama administration’s Affordable Care Act.

“If health care spending had been unchanged, the headline GDP [gross domestic product] growth number would have been -1.0 percent,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, told the Wall Street Journal .
Even as job creation barely keeps up with population growth, the few jobs that are being created are disproportionately low-wage, temporary or part-time. Since 2008, 1.9 million high- and average-paying jobs in the private sector have been eliminated and replaced by 1.8 million low-wage jobs, according to a report issued earlier this week by the National Employment Law Project.
The Labor Department said earlier this month that the US added 192,000 jobs in March while the unemployment rate remained unchanged at 6.7 percent. Last week, initial jobless claims rose slightly, to 304,000.
Economic growth has been dragged down by persistent weakness in the housing market. New home sales fell by 14.5 percent in March from the month before, according to figures released by the Commerce Department last week.
Mortgage lending, meanwhile, has fallen to a 14-year low. Only $235 billion in home loans was issued in the first quarter of this year, the lowest level since 2000. This is a 25 percent decline since the end of last year. The fall-off in new mortgages has been partially driven by the rise in mortgage rates, with the average interest on 30-year fixed-rate mortgages now at 4.3 percent, up from 3.3 percent last May.
The rise in interest rates has paralleled the Federal Reserve’s reduction in its monthly cash infusions into the financial system known as Quantitative Easing. The Federal Reserve’s policy-making Federal Open Market Committee (FOMC) concluded its two-day meeting Wednesday with the announcement that the Fed would reduce its monthly asset purchases by $10 billion, to $45 billion a month, in line with its earlier announcements.
Some economists have warned that the Federal Reserve’s “tapering” of Quantitative Easing will have a significant impact on the real economy, as the artificial inflation of housing and asset prices caused by the policy wears off. On Monday, economist Michael Pento wrote that “the tapering of asset purchases will lead to a collapse in asset prices and a severe recession.” He added, “Since the economic ‘recovery’ was predicated on the rebuilding of asset bubbles, a long delayed and brutal recession will start to unfold later this year.”
Federal Reserve chair Janet Yellen said in a press conference after the FOMC meeting that the US economy had “slowed sharply during the winter in part because of adverse weather conditions,” but that “economic activity has picked up recently.”
Yellen stressed, however, that the Federal Reserve expects to keep the federal funds rate near zero “for a considerable time” after the scheduled end of Quantitative Easing. The rate has been essentially zero since December 2008.
Stocks responded to Yellen’s assurances with a moderate rally. The Dow Jones Industrial Average closed up 45 points, hitting a new record high for the first time this year.
In sharp contrast to the Federal Reserve’s reaffirmation that it would continue to provide virtually unlimited cheap credit to Wall Street for the foreseeable future, the US Senate on Wednesday shelved a Democratic-backed proposal to increase the minimum wage to $10.10 per hour. The bill failed to get the 60 votes needed to overcome a Republican filibuster.
The Democrats’ proposal to raise the minimum wage is a cynical electoral maneuver, intended to allow the party to posture as a force for greater economic equality in the run-up to the 2014 midterm elections. In an article published Monday, the Wall Street Journal called the proposal a “wedge issue,” which, while “likely to be defeated,” is “one that Democrats see as a winner on the campaign trail.”
Following the vote, President Obama declared: “If your member of Congress doesn’t support raising the minimum wage…you have to let them know they’re out of step, and that if they keep putting politics ahead of working Americans, you’ll put them out of office.”
Even if the Democrats’ minimum wage proposal were passed, it would still leave the minimum wage at a lower level than it was, in real terms, in 1968. At $10.10 an hour, a worker laboring 34 hours a week—the average in America—would earn an annual pre-tax income of $17,856, significantly lower than the government’s absurdly low poverty threshold for a family of three.
Andre Damon writes for WSWS.

Why Did The Fed Hold An Emergency Meeting Yesterday?

Everyone knows that the FOMC announcement, due today at 2 pm, will be the culmination of an orderly, traditional 2-day meeting which started yesterday, April 29.
What few know, however, is that in addition to the generic FOMC meeting which started yesterday at 10:30 am, at about the same time, the Fed also held an "expedited" emergency meeting between the four board governors Yellen, Tarullo, Stein, and Powell.
As the WSJ adds, "The four members of the board met to discuss "medium-term monetary policy issues," according to a meeting notice posted on the Fed's website.... A Fed spokesman declined to say if the two meetings were combined, or how long the board meeting lasted." The WSJ also notes that the"last time the Fed board met to discuss "medium-term monetary policy issues" was on April 26, 2011, according to analysts at BNP Paribas."
The notice:

So what was discussed? We won't know because the "meeting was closed

more @ http://www.zerohedge.com/news/2014-04-30/why-did-fed-hold-emergency-meeting-yesterday

‘I Was Right, The Housing Recovery Was A Sham’ – The Guardian’s Heidi Moore

The housing market appears to be hurting. Last week we learned that sales of new homes plunged 14.5% in March compared to February, while sales of existing homes fell slightly month-to-month, too. Meanwhile, demand for home loans have hit a 14-year low in the first quarter, according to industry newsletter Inside Mortgage Finance.But today the National Association of Realtors reported that pending home sales in March rose for the first time in nine months. They were up 3.4% from February, but down 7.9% from a year ago.Heidi Moore, U.S. finance and economics editor at The Guardian, called the housing recovery a sham last June and in the video above says the latest run of weak data suggests the same concerns she raised when the recovery was humming along last summer. Moore says the recent slowdown reveals the recovery was in fact “dubious” and based on investor demand versus real homebuyers…. 

http://finance.yahoo.com/blogs/daily-ticker/i-was-right–the-housing-recovery-was-a-sham–guardian-s-heidi-moore-191918931.html 

Case-Shiller Has Longest Home Price Decline Stretch Since 2012; 13 Of 20 Cities See Price Drops 

What a difference Seasonally adjusted and Unadjusted data makes: for the best example look no further than the just released latest Case Shiller index, where the Seasonally Adjusted 20 City Composite Index grew by a less than expected 0.76% (Exp. 0.80%), down from the 0.80% last month, and the Year over Year price also missed expectations of a 13.00% increase, printing slightly less at 12.86%. However, while the well-delayed February data was a modest miss across the board, more importantly it represented that there has been price increases for 24 consecutive months. One gets a very different story if one looks at the NSA data, where Y/Y prices increased the same, or 12.86%, however on a sequential basis, prices have now declined for 4 months in a row – the longest negative stretch in actual home prices since March 2012.What’s worse, even Case Shiller itself appears to have given up on housing as the driver of the wealth effect: “Five years into the recovery from the recession, the economy will need to look to gains in consumer  spending and business investment more than housing. Long overdue activity in residential  construction would be welcome, but is certainly not assured.” 

http://www.zerohedge.com/news/2014-04-29/case-shiller-has-longest-home-price-decline-stretch-2012-13-20-cities-see-price-drop

Read more at http://investmentwatchblog.com/i-was-right-the-housing-recovery-was-a-sham-the-guardians-heidi-moore/#AvCES3fbPmkkbPEy.99

MAX KEISER says the U.S. DOLLAR is FINISHED

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MAX KEISER says the U.S. DOLLAR is FINISHED

While 20-year highs for the CNY may be enough for many to question the USD’s ongoing reserve status, it is clear that there are many other plans afoot that undermine the dominance of the greenback.

Submitted by Michael Snyder of The Economic Collapse blog,On the global financial stage, China is playing chess while the U.S. is playing checkers, and the Chinese are now accelerating their long-term plan to dethrone the U.S. dollar. You see, the truth is that China does not plan to allow the U.S. financial system to dominate the world indefinitely. Right now, China is the number one exporter on the globe and China will have the largest economy on the planet at some point in the coming years.The Chinese would like to see global currency usage reflect this shift in global economic power. At the moment, most global trade is conducted in U.S. dollars and more than 60 percent of all global foreign exchange reserves are held in U.S. dollars. This gives the United States an enormous built-in advantage, but thanks to decades of incredibly bad decisions this advantage is starting to erode. And due to the recent political instability in Washington D.C., the Chinese sense vulnerability. China has begun to publicly mock the level of U.S. debt, Chinese officials have publicly threatened to stop buying any more U.S. debt, the Chinese have started to aggressively make currency swap agreements with other major global powers, and China has been accumulating unprecedented amounts of gold. All of these moves are setting up the moment in the future when China will completely pull the rug out from under the U.S. dollar.Today, the U.S. financial system is the core of the global financial system. Because nearly everybody uses the U.S. dollar to buy oil and to trade with one another, this creates a tremendous demand for U.S. dollars around the planet. So other nations are generally very happy to take our dollars in exchange for oil, cheap plastic gadgets and other things that U.S. consumers “need”.Those wild and crazy Mayans put down their marker that the end of the world would occur on Dec. 21, 2012 — about two months from now. There is, of course, some small chance that they might be right. On the other hand, there is a very large probability that the real end of the world will occur around March 4, 2014.The doomsday clock will ring then because the U.S. economy may fully crash around that date, which will, in turn, bring down all world economies and all hope of any recovery for the foreseeable future — certainly over the course of most of our lifetimes.Interest rates will skyrocket, businesses will fail, unemployment will go to record levels, material and food shortages will be rampant, and there could be major social unrest.Any wishful thinking that America is in a “recovery” and that “things are getting better” is an illusion.The problem is not Medicare, which won’t quit on us for another six or seven years. Nor is it Social Security, which will not be fully bankrupt for another 15 years or so. The crisis is much more immediate and much more serious. “max keiser” “fortune 500″ attack 2014 usd dollar “u.s. dollar” finance economy bank banking “bank account” insider markets trading “forex trading” forex commodity japan japanese debt loan “payday loan” money cash “interest rate” collapse etf investment “bear market” china savings “savings account” “made in usa” gold silver “sell gold” “buy gold” “silver eagle coin” “perth mint” “gold trading” bitcoin “agenda nwo” trendy sheeple sheep wake up 9/11 truth truther wearechange end game control power elite mafia bilderberg 2014
black 9/11 conspiracy financial crime whistleblower insider trading building 7 clintonAppearing on CNBC yesterday, former Congressman Ron Paul warned that if the US continues on its current course, the dollar will collapse, and gold will literally be priceless.“Eventually, if we’re not careful, it will go to infinity, because the dollar will collapse totally,” Paul said on CNBC.com‘s Futures Now.“As long as we have excessive spending, and excessive computerized money, we are going to see gold go up,” Paul urged, noting that as the value of the dollar is destroyed, everything measured against dollars will increase in value.Paul added that recent drops in gold prices do not factor into the long term outlook.“Markets do these types of things—they go up sharply, and sometimes they take a rest,” Paul said. “I was never very good on short term, whether it’s the stock market, or whatever.”“If you look at the record of the value of the dollar since the Fed’s been in existence, we have about a 2-cent dollar. And gold used to be $20 an ounce. So I’d say the record is rather clear on the side of commodity money.” Paul said.

Read more at http://investmentwatchblog.com/max-keiser-says-the-u-s-dollar-is-finished/#fKXSRoFyryzvUR7D.99

Is Your Employer Betting on Your Death?

The US Economy Is A House Of Cards

Dr. Paul Craig Roberts

The US economy is a house of cards. Every aspect of it is fraudulent, and the illusion of recovery is created with fraudulent statistics.

American capitalism itself is an illusion. All financial markets are rigged. Massive liquidity poured into financial markets by the Federal Reserve’s Quantitative Easing inflates stock and bond prices and drives interest rates, which are supposed to be a measure of the cost of capital, to zero or negative, with the implication that capital is so abundant that its cost is zero and can be had for free. Large enterprises, such as mega-banks and auto manufacturers, that go bankrupt are not permitted to fail. Instead, public debt and money creation are used to cover private losses and keep corporations “too big to fail” afloat at the expense not of shareholders but of people who do not own the shares of the corporations.

Profits are no longer a measure that social welfare is being served by capitalism’s efficient use of resources when profits are achieved by substituting cheaper foreign labor for domestic labor, with resultant decline in consumer purchasing power and rise in income and wealth inequality. In the 21st century, the era of jobs offshoring, the US has experienced an unprecedented explosion in income and wealth inequality. I have made reference to this hard evidence of the failure of capitalism to provide for the social welfare in the traditional economic sense in my book, The Failure of Laissez Faire Capitalism, and Thomas Piketty’s just published book, Capital in the 21st Century, has brought an alarming picture of reality to insouciant economists, such as Paul Krugman.

As worrisome as Piketty’s picture is of inequality, I agree with Michael Hudson that the situation is worse than Piketty describes. http://michael-hudson.com/2014/04/pikettys-wealth-gap-wake-up/

Capitalism has been transformed by powerful private interests whose control over governments, courts, and regulatory agencies has turned capitalism into a looting mechanism. Wall Street no longer performs any positive function. Wall Street is a looting mechanism, a deadweight loss to society. Wall Street makes profits by front-running trades with fast computers, by selling fraudulent financial instruments that it is betting against as investment grade securities, by leveraging equity to unprecedented heights, making bets that cannot be covered, and by rigging all commodity markets.

The Federal Reserve and the US Treasury’s “Plunge Protection Team” aid the looting by supporting the stock market with purchases of stock futures, and protect the dollar from the extraordinary money-printing by selling naked shorts into the Comex gold futures market.

The US economy no longer is based on education, hard work, free market prices and the accountability that real free markets impose. Instead, the US economy is based on manipulation of prices, speculative control of commodities, support of the dollar by Washington’s puppet states, manipulated and falsified official statistics, propaganda from the financial media, and inertia by countries, such as Russia and China, who are directly harmed, both economically and politically, by the dollar payments system.

As the governments in most of the rest of the world are incompetent, Washington’s incompetence doesn’t stand out, and this is Washington’s salvation.

But it is not a salvation for Americans who live under Washington’s rule. As all statistical evidence makes completely clear, the share of income and wealth going to the bulk of the US population is declining. This decline means the end of the consumer market that has been the mainstay of the US economy. Now that the mega-rich have even more disproportionate shares of the income and wealth, what happens to an economy based on selling imports and off-shored production of goods and services to a domestic consumer market? How do the vast majority of Americans purchase more when their incomes have not grown for years and have even declined and they are too impoverished to borrow more from banks that won’t lend?

The America in which I grew up was self-sufficient. Foreign trade was a small part of the economy. When I was Assistant Secretary of the Treasury, the US still had a trade surplus except for oil. Offshoring of America’s jobs had not begun, and US earnings on its foreign investments exceeded foreign earnings on US investments. Therefore, America’s earnings abroad covered its energy deficit in its balance of trade.

The economic stability achieved during the Reagan administration was shattered by Wall Street greed. Wall Street threatened corporations with takeovers if the corporations did not produce higher profits by relocating their production of goods and services for American markets abroad. The lower labor costs boosted earnings and stock prices and satisfied Wall Street’s cravings for ever more earnings, but brought an end to the rise in US living standards except for the mega-rich. Financial deregulation loaded the economy with the risks of asset bubbles.

Americans are an amazingly insouciant people. By now any other people would have burnt Wall Street to the ground.

Washington has unique subjects. Americans will take endless abuse and blame some outside government for their predicament–Iraq, Afghanistan, Libya, China, Russia. Such an insouciant and passive people are ideal targets for looting, and their economy, hollowed-out by looting, is a house of cards.

The unemployment rate in Italy reached 12.7 percent in March, an initial estimate from national statistics agency Istat showed on Wednesday.
The data show Italy's high unemployment rate stabilizing with last month's figure matching that of February, which was revised down from the provisional estimate of 13 percent.
There were however signs of improvement as the number of unemployed people in Italy inched down by 0.2 percent between February and March, with 3.2 million people out of work last month.
The situation remains most precarious for the under-25s, with Italy's youth unemployment rate hitting 42.7 percent in March - 0.1 percent lower than February this year but 3.1 percent higher than a year ago.
Source and full story: The Local (Italy), 30 April 2014