Reclaiming Common Sense

First Ever $19 Trillion Dollar US Economy

There were a number of people wringing their hands and expressing concern when the first quarter Gross Domestic Product (GDP) rate was first reported at 0.7%. There was a little less fretting and still some concern when last month that value was revised to 1.2%. Today the value was revised higher and very little attention was given to it. This is the annualized GDP growth rate. This is where we would be if every quarter grew at the same rate as the first quarter. The Real GDP, the Annual Rate of growth over the past four quarters was originally reported at 1.9%. Last month the Real GDP was revised higher to 2.0% Today that value was also revised higher. Nothing. So what happened in today's "final" revision to the first quarter GDP.

Annualized GDP Rose to 1.4% - Better than seven of the past ten years. The headline GDP was revised from 1.2% to 1.4%. The driving forces for the GDP number were Gross Private Domestic Investment (0.60%) and Personal Consumption Expenditures (0.75%) Government spending was a drag on the economy, again.Exports are growing at a Annualized rate of  2.8% and Imports are growing at an annualized rate of over 6%.

Real GDP rose for the third straight quarter. Real GDP, the growth of the economy during the past four quarters, hit 2.1% This was better than what was recorded during first quarter 2007, 2008, 2009, 2010, 2011, 2013, 2014, and 2016. This is not being mentioned in the media. This growth helped us hit the $19 Trillion dollar economy level for the first time. It is important to note that GDP was slowing from first quarter of 2015 through the second quarter of 2016. It is also important to note that since 2010 we normally see real GDP growth in excess of 2.0 percent and could be as high as 3.3%.

Where are we heading? The column "Which Way is the GDP Heading" projected increases in the final revision of the annualized and real GDP values for the first quarter to be reported today. It also projected that the annualized GDP could exceed 3.0% We may have to have a value in the 2.4% to 2.6% range before we hit 3.0% during the third quarter. A value of 4% would be a wake-up call to the "Debbie Downers" who are proclaiming gloom and doom. This is based on improving new home construction and retail spending. The Real GDP still looks like it could grow at a pace between 2.4% and 2.6%. The numbers to watch are the Gross Private Domestic Investment and Personal Consumption Expenditures.

It's the economy.