The insanity coming out of "financial media" on the GDP report is amusing -- but not surprising.

Real gross domestic product (GDP) increased at an annual rate of 1.6 percent in the first quarter of 2024 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2023, real GDP increased 3.4 percent.

Here's the basic problem in this report -- the last three reports are a declining trend and the Q3 2023 number looks like a pull-forward rather than an acceleration in growth, as the overall trend from Q3 2022 looks like those two interim reports were people having "one last party."

The increase in consumer spending reflected an increase in services that was partly offset by a decrease in goods. Within services, the increase primarily reflected increases in health care as well as financial services and insurance. 

Health care and insurance are not discretionary purchases and this is extremely bad news economically as it wasn't absorbed; it  came out of everything else.

Oh, and as for inflation?

The price index for gross domestic purchases increased 3.1 percent in the first quarter, compared with an increase of 1.9 percent in the fourth quarter (table 4). The personal consumption expenditures (PCE) price index increased 3.4 percent, compared with an increase of 1.8 percent. Excluding food and energy prices, the PCE price index increased 3.7 percent, compared with an increase of 2.0 percent.

ALL of these figures, including core, are well above target -- in fact, approaching double said target.

These are extremely hot inflation numbers and they're in non-discretionary purchases which nobody can get around and extremely sticky too as car insurance is typically a six-month term with property insurance renewing annually.  There are lots of reports of 20% increases in insurance costs for autos and homes -- and in many cases they're actually higher, and this is among people without any claims.  I'm seeing it here, and I'm not in a high-risk area.  If you are, or in a place where various government policies have driven up loss rates (e.g. uninsured motorists) then you may be looking at doubles and again, no insurance means either no driving or running the risk of driving on a suspended license which, when you get caught, will mean SR-22 policies to get reinstated (and don't ask the price -- its eye-watering.)

If you're still in the camp that rates are coming down this year you're wrong.  No they're not with price indices going up like this, and yet that has been the mantra for the last six months+ in the asset markets.

I'll take the under on that and that nice, safe 5%+ in the short end of the Treasury curve looks real good compared with a likely 30%+ loss in equities or (much worse, due to it being illiquid) Real Estate.