1stQ2015 GDP -0.7%

GDP (1stQ2015)

– Real GDP quarter/quarter seasonally adjusted, annualized  -0.7%. Previous was +0.2%.
– GDP price index quarter/quarter seasonally adjusted, annualized -0.1%. Previous was -0.1%,

When quarterly GDP is first issued is has 3 real months of Consumer Spending but only 2 months of Business Spending on Inventories and Investments and only 2 months of Imports and Exports.

When real data for March came in the results were lower inventory growth, lower exports, and higher imports hurt GDP.

Some opinions on this:  1) a strengthened US dollar huts exports and GDP and helps imports, 2) the BEA’s method of acquiring and releasing this data is terrible.  It would make more sense

to me to release accurate data rather than stick with the method of issuing a first report based on 2 month’s data for all but consumer spending 3) media always paint a rosy picture.  In this case weak GDP was due to the west coast port strike and bad weather.

BEA has been making a case to revise the way it corrects 1stQ GDP.  Their point is that GDP per the present adjustments always seems to disappoint in the 1stQ and that, since it always disappoints, their present corrections for 1stQ must be inaccurate.

While almost no one believes the economy will contract in the 2ndQ the fact is that economic growth is sluggish and we have never really recovered from the recession.