Courtesy of Mish.
First quarter GDP came in at -0.7% pretty much in line with the Bloomberg Consensus estimate of -0.8%.
First-quarter GDP was revised down about as expected, to minus 0.7 percent vs expectations for minus 0.8 and compared with an initial reading of plus 0.2 percent. Updated source data made for a bigger negative contribution from net exports as imports spiked 5.6 percent from an initial gain of 1.8 percent. The change here is tied to the port strike and the sudden unloading of imports in March. A lower estimate for inventory growth was also a negative. Turning to demand, final sales were revised downward to minus 1.1 percent from minus 0.5 percent.
On the positive side, the contribution from residential fixed investment rose to 5.0 percent from 1.3 percent while the negative contribution from business spending improved 6 tenths to minus 2.8 percent.
The first quarter was definitely weak, showing the first contraction since first-quarter 2014 when GDP fell 2.1 percent in another winter quarter affected by unusually severe weather. The Fed itself has been noting the risk that the pattern of first quarter weakness could reflect how the numbers are crunched by government statisticians to account for seasonal variations. This process may have exaggerated the underlying weakness in the quarter.
Where is GDP currently tracking? Early estimates were in the 3.0 percent range but, due to weak consumer spending, have been slipping to the 2.0 percent range.
Economists Get Zero Accolades
Economists get zero credit for guessing this one correct. Their negative estimate was in arrears after consumer spending unexpectedly collapsed.
This is what the “Blue Chip” economists thought about first quarter GDP on April 2.
GDPNow Estimate for 1st Quarter, April 2
Note the “Blue Chip” consensus at the end of the first quarter was for 1.7% annualized growth. They were off by 2.4 percentage points.
Pathetic.
Bloomberg notes the “port strike and the sudden unloading of imports in March.” Question of the day: Had they not unloaded merchandise in March, would they have done so in April?…
