Gross private domestic investment is no longer growing. The last time that happened was in 2009 during the Great Recession.
Gross private domestic investment (GPDI) is the amount of money that local businesses invest within their country. It includes replacement purchases plus net additions to capital assets plus investments in inventories. These expenditures account for approximately 15% to 18% of the gross domestic product (GDP) in the US.
Gross private domestic investment is the sum of these three factors:
1. Business expenditures
2. Expenditures by landlords
3. Changes in inventory
Business expenditures are for things like machines, tools, land, and buildings.
Expenditures by landlords are for things like home improvements, or new buildings.
Changes in inventories reflect the inventory levels of finished products, intermediate goods, raw materials, and other inputs that businesses keep on hand to use in production. Inventories also include final products that are produced but remain unsold.
Charting GPDI in dollars, we have a contraction in spending by more than one hundred million dollars between January 1, 2016, through March 31, 2016.
The GPDI grinding to a halt confirms the Challenger, Gray and Christmas report showing a massive increase in planned job cuts between January 2015 and January 2016. The top sectors for planned job cuts in 2016 are Retail, Computer, Pharmaceutical, Telecommunications, Automotive, and Consumer Products.
The Bureau of Labor Statistics (BLS) published a report on the GPDI that gave a forecasted annual growth rate of 2.9%, with a target of $3610.9 by 2024. If we divide 2.9% by four quarters in the year to get a per quarter growth rate needed to achieve 2.9% by the end of the year, we end up with 0.725%. Instead of +0.725% growth, we have a contraction of -0.4% in Q1.
If the BLS prediction was correct for Q1, we should have ended the quarter at around $3051 billion. Instead, we ended Q1 at $3017.50 billion. That's billions of dollars short of what the BLS prediction showed for GPDI.
The BLS and the Federal Reserve are only going to be able to lie, cheat, fake, and manipulate the economic data for so long. When the illusion is over, the stock market is going to crash just like it does every bear market cycle.