Recession Ahead

The final figures for the first quarter GDP are in, and it shows that the economy shrunk more than previously calculated (par for the course with the current regime, which always releases fake numbers first). From CNBC:

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.

The Commerce Department said on Wednesday gross domestic product fell at a 2.9 percent annual rate, the economy's worst performance in five years, instead of the 1.0 percent pace it had reported last month.

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. Growth has now been revised down by a total of 3.0 percentage points since the government's first estimate was published in April, which had the economy expanding at a 0.1 percent rate.

The difference between the second and third estimates was the largest on records going back to 1976, the Commerce Department said. Economists had expected growth to be revised to show it contracting at a 1.7 percent rate. Sharp revisions to GDP numbers are not unusual as the government does not have complete data when it makes its initial and preliminary estimates.

The article discusses mixed signals regarding second quarter growth, then adds:

A separate report showed orders for long-lasting U.S. manufactured goods unexpectedly fell in May, suggesting an anticipated rebound in growth this quarter could fall short of expectations, even as a measure of business capital spending plans rose.

The Commerce Department said durable goods orders declined 1.0 percent as demand for transportation, machinery, computers and electronic products, electrical equipment, appliances and components, and defense capital goods fell.

 Why do I expect a recession? Two primary reasons: First, due to ISIS's continued victories in Iraq, including capture of several small oil fields, oil prices will increase. Historically, increases in oil prices--particularly sharp increases--have led to recessions. Second, there is no hope of any relief in energy prices. The powers that be are planning an end run around Congress to further choke energy production and impose a carbon trading scheme. From the Washington Examiner:

Senior White House officials and Treasury Secretary Jack Lew are set to meet this week with Tom Steyer, an environmental activist pledging to pump up to $100 million into the November midterm elections, as part of a new campaign to promote President Obama's green agenda. 

“On Wednesday, senior White House leadership and Secretary Lew will meet with former Treasury Secretary Hank Paulson, former HUD Secretary Henry Cisneros, Cargill CEO Greg Page, and Tom Steyer [to] discuss the results of their soon-to-be-released Risky Business report -- which assesses the economic risks of climate change,” a White House official said, previewing the meeting.

... According to the White House official, Lew and senior Obama advisers John Podesta and Valerie Jarrett and National Oceanic and Atmospheric Administration Administrator Kathryn Sullivan and Federal Emergency Management Agency Administrator Craig Fugate will meet Tuesday with insurance industry leaders to discuss the “economic consequences of increasingly frequent and severe extreme weather.”

 From a different Washington Examiner article:

The climate change debate took a sharp left turn on Tuesday when several former cabinet secretaries, former New York Mayor Michael Bloomberg and a key Wall Street donor to environmental causes said companies that don't buy into global warming should be punished and penalized. 

While the Obama administration has called for polluters to clean up their operations, the former government and business leader said the hammer should come down on business that ignore the potential impact of climate change on their companies and rewards such as greater investment be doled out to those that do. 

"We need to reward people whose behavior reduces climate risk and penalize people who add to it,” said Thomas Steyer, a former hedge fund manager and environmentalist who is a major player and funder of climate change initiatives. “Climate risk should be taken into account by every business and every investor,” he said at a New York press conference to unveil a report on how global warming could cool the U.S. economy. 

He is one of the leaders with Bloomberg, three former Clinton cabinet members and former Bush Treasury Secretary Henry Paulson, of the Risky Business Project that released Tuesday's "Risky Business" report. Steyer and members of his group plan to discuss it with White House officials Wednesday. 

Overall, the report said that climate change could cost East Coast business and governments $35 billion a year. In other areas of the nation, said Bloomberg, it will be too hot to work outside. And he also warned of a “really scary” potential that tree-killing bugs might not be limited by cold winters.

 The Power Line blog has more about Steyer here, including the following:

Billionaire hedge fund operator and “green” energy magnate Tom Steyer has pledged $100 million in the 2014 election cycle to help Democratic candidates who oppose the Keystone pipeline and who favor “green” energy over fossil fuels. Steyer claims to be a man of principle who has no financial interest in the causes he supports, but acts only for the public good. That is a ridiculous claim: Steyer is the ultimate rent-seeker who depends on government connections to produce subsidies and mandates that make his “green” energy investments profitable. He also is, or was until recently, a major investor in Kinder Morgan, which is building a competitor to the Keystone pipeline. Go here, here, here, here, here and here for more information about how Steyer uses his political donations and consequent connections to enhance his already vast fortune. 

But Steyer’s hypocrisy goes still deeper. Today, he is a bitter opponent of fossil fuels, especially coal. That fits with his current economic interests: banning coal-fired power plants will boost the value of his solar projects. But it was not always thus. In fact, Steyer owes his fortune in large part to the fact that he has been one of the world’s largest financers of coal projects. Tom Steyer was for coal before he was against it.

 Read the whole thing.