WHY THE -2.9% FIRST QTR GDP IS EVEN WORSE THAN IT LOOKS

On 6/25/14 the first Qtr GDP was revised downward to -2.9%.  Of course, this is catastrophic after all the unnatural interventions to invigorate the economy.  But there is a crucial and overlooked reason why this report is even worse than it seems.  A reason which will leave little chance that the second quarter will not be another negative print - triggering the definition of a new recession right on the heels of the "Great Recession".

It involves one of America's favorite institutions.  Yes, our beloved IRS.  They don't like to talk about it much, but the fact is that by far the most Americans with an income tax refund file their returns prior to March 31st.  With today's age of computer generated returns this means that these people get their hands on their money for spending purposes prior to the beginning of the 2nd quarter.

With our economy being 70% consumption-driven, that means that the segment most prone to actually immediately spend the tax return "shot their wad" before March 31st.  (The delayers either owe or are less inclined to rely on a tax refund to spend - hence the delay in filing in the first place).

Anyone who expects a better (or above zero)  GDP revised print for the second quarter has surely not contemplated this simple fact.  It's so simple that I'm flabbergasted I've not read it before.

-  Birney K. Brown