Collapse (Their Word, Not Mine) Of The Economy Due To Cold Weather, Not ... Global Warming ..

Updates

June 29, 2014: I should devote a blog entirely to how the Bakken saved the US economy. Again, remember, I'm talking about all three Bakkens: a) the geographical, oil-producing Bakken centered in two or three counties in western North Dakota; b) the incredible working relationship between the industry and government to make it possible; and, c) the technology and processes worked out in North Dakota and then used elsewhere, the "Bakken laboratory."

Here's another example: the new Weatherford facility in Katy, TX, which one could argue is a direct result of the three Bakkens. FuelFix is reporting (with a great video):

The new facility — built at a cost of about $100 million — is the latest manufacturing plant in the area for the Houston-based oil field service company and represents the company’s belief that demand for its production technology is on the uptick.

Every month, it turns out 120 pump units — the iconic machines also known as pump jacks, nodding donkeys, thirsty birds or rocking horses — that rock back-and-forth in a process used to pull liquid from an oil well when there’s not enough pressure for it flow to the surface on its own.

Today, the facility, which opened in January, employs 135 people, but Weatherford executives say they expect to have 335 people here by the end of next year, and it could eventually employ 500.

Original Post

[The "big story" that was not reported elsewhere is reported at the very end.]

This was the "forecast" early this morning prior to the actual release of the revised 1Q14 GDP:

U.S. stock index futures pointed to a higher Wall Street open on Wednesday, ahead of the release of the final estimate for first-quarter gross domestic product.

The GDP report is expected to reveal a sharper contraction of around 1.8 percent, rather than the annualized 1.0 percent previously indicated.

"Since the preliminary report, data have continued to surprise to the downside, with the trade balance widening sharply and core retail sales posting a decline in May," wrote Bill Diviney and Kevin Norrish in a Barclays research note on Wednesday. 

Like you, I can only imagine your surprise to see that analysts expected that contraction of the 1Q14 GDP was worse than originally reported. The bar graph below is all under the Obama administration: 13 consecutive quarters; a trillion dollars in stimulus; and monthly boiler-plate after monthly boiler-plate that the economy is improving. Seriously? UC Irvine? Really?

But then this, the Reuters headline (note the word "collapses" -- a word I haven't seen used to describe the economy in quite some time: "US economy collapses in first quarter, but growing again." [A reader pointed out that the last time we saw a "collapse" in the economy was about the time Mr Obama came into office. So, I guess 2014 (now) and 2009 (then) could be considered "in quite some time." And, of course, that "collapse" was not in the middle of a "recovery."]

The U.S. economy contracted at a much steeper pace in the first quarter than previously estimated, turning in one of its worst-ever non-recession performances, but growth already appears to have rebounded strongly.

And then this, from the CNN business analyst: "don't freak out about a minus 3% GDP (rounded)." The CNN business analyst's summary:

The same old story remains: "This recovery is underway, but it's choppy and still very slow."

Seriously? UC Irvine? Really?

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The Irony

The analysts blame the collapsing economy (their word, not mine) on ... drum roll ... cold weather. As long as I've been investing (since 1984) I do not recall ever -- ever -- that a "collapse" (their word, not mine) of the economy was due to cold weather. 

We have been told that the biggest threat to the US economy is the threat of global warming. And now we learn that the collapse (their word, not mine) of the economy in the 1Q14 was due to cold weather, not global warming. I can't make this stuff up.

The house of cards continues to topple.

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The Irony

Then, think about this. The folks forecasting the GDP (almost in real-time), incredibly off the mark, are the same folks telling us that two centuries from now global warming will result in oceans coming up halfway to the top of the Statue of Liberty (cover of National Geographic). I can't make this up either: google "National Geographic cover Statue of Liberty global warming."

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The Big Story Missed By Everyone

Now, ask yourself: how badly would the contraction have been had it not been for the Bakken, the Eagle Ford, and the Permian? More importantly, how many earlier quarters would have had negative GDP had it not been for the oil and gas industry? No one is talking about that inconvenient truth. 

With the question, the US rail industry was "saved" by the Bakken. Without question, the US steel industry was saved by the Bakken. Without question, there would be hundreds of thousands more Americans unemployed if it had not been for the Bakken.