Wikinvest Wire

U.S. Q1 GDP improved - don't get too excited

Thursday, May 29, 2008

The Department of Commerce released the "preliminary" estimate for first quarter GDP indicating an improvement to a seasonally adjusted annualized growth rate of 0.9 percent.
Don't get too excited.

The 0.3 percentage point gain from last month's "advance" reading of 0.6 percent was driven by a gain of 0.6 percentage points due to a lower trade deficit combined with a 0.3 percentage point decline in private domestic investment largely due to a change in inventories as shown below.
Today's report is the second of three reports for economic growth during the first quarter - the "final" estimate will be released at the end of June.

The GDP price deflator, used to adjust "nominal" GDP to "real" GDP was unchanged from the advance estimate at 2.6 percent.

With soaring prices for both food and energy during the first quarter of the year, does anyone really believe that a 2.6 percent annualized rate of inflation is the right number to be used to calculate "inflation adjusted" growth?

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sbvor said...

1) The last 25 years have been extraordinarily good and the charts I present in the last link below prove it.

2) With today’s 50% upward first revision to the Q1 GDP data, the likelihood of a recession in 2008 is fading really, really fast.

It is probable that Q2 will show slower growth than Q1. But the best minds remain convinced Q2 will show positive GDP growth, every quarter of 2008 will show positive growth and 2009 will grow faster than that.

Once we get the final numbers for Q2 (9/26/08), we will be able to safely bury all this media hysteria in the ash pile of a very long, very sad history of media folly.

Fortunately, we’ll be able to bury the 2008 recession myth before the November election. Thus, the political ploy on the part of Dems will have backfired (big-time).

See my latest updates on this sorry media driven hysteria here:
The Recession of 2008 That Wasn’t?

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