Reclaiming Common Sense

There is a considerable amount of information included in the monthly Gross Domestic Product Reports. Every quarter there is a new quarter of GDP numbers. Every month there are revisions to the prior quarter's data. There is the advance number, the preliminary number, and the final number. There are also annual revisions to prior final data.The first quarter Annualized rate of GDP growth is normally anemic, at best, negative at worst. The way that they calculate the first quarter data was recently revised.

Expect an Annualized number between 1.5 and 2.0%  Theannualized data has been over 0.9% for the past four quarters. We had a value well over 2% during 2013Q1. There is not much rhyme or reason to the annualized data. The data for 2015Q4 and 2016Q1 were anemic and virtually unchanged. If we are unchanged from 2016Q4 then we could exceed 2.0% growth. There was a slight drop from 2.3% to 2.0% from 2014Q4 to 2015Q1. Personal consumption has been driving the Table 1 data. We have to monitor the impacts of imports and exports.

Real GDP should exceed 2.0%. The annual rate of growth for the prior year was 2.0% during 2016Q4. We have seen strong CPS job data, non-seasonally adjusted, during February and March. We did not have as bad a January CPS job loss as we could have seen - we see real, non-seasonally adjusted worker and job loss every January. We have had Real GDP over 2.0% during 2012, and 2015.  We sometimes see the Real, same quarter 1 year growth rate, improve from the fourth quarter level as often as we have seen a decline. Five declines, three increases, one unchanged. Close enough. Expect a Real GDP between 1.7 and 2.3%. The same factors impact the table 8 data as do impact the table 1 data. Personal consumption was strong during March. There is strong consumer sentiment. Will we see a surge in capital expenditures?

The media, as a whole, have been preparing us for a weak first quarter - possibly under 1%.  They may be off by a percentage point or more. The annual trend has been upward. We are starting at a point comparable to 2014 and 2010. Could we see another 2015Q1 for the annualized GDP? Retail sales have been solid. New and existing home sales have been solid. Hiring has been exceptionally good. More hiring normally begets more spending which positively impacts the goods and service measured by the GDP.  The question is if we get good news, over 2.0% for Annualized or Real GDP, will it be reported enthusiastically?

It's the economy.