- At Yahoo’s Economic Calendar — Briefing.com has an annualized 1.0 percent contraction; the “markets” have a 0.7 percent contraction. Both are steep falls from the original estimate of a positive annualized 0.2 percent in late April, which itself fell short of most of the predictions, which were in the neighborhood of 1.0 percent.
- The Associated Press’s Martin Crutsinger last night wrote that “Economists surveyed by data firm FactSet predict that the government will say GDP shrank at an annual rate of 0.8 percent last quarter.” But (of course) “economists see little cause for concern.” And yes, I’ve noticed the discussions about how “Many economists also suspect that the government’s calculations have tended to underestimate growth in the first quarter of each year.”
Somehow, that was never a problem until the Obama administration came along, but now all of a sudden there’s “residual seasonality” which must be “mitigated.” It doesn’t help the credibility of these claims that they were originally raised by one of the most pathetic, rude, argumentative Keynesian koolaid-drinkers on the planet.
For what it’s worth, my research indicates that during the past 30 years the net alleged “problem” has entirely occurred during leftist-controlled admnistrations and has been absent during others. (How weird … /sarcasm) I’ll have more on that in separate writeups.
BACK ON POINT — The report will appear here at 8:30.
8:25 a.m.: A predictive note — I’ve pointed out several times duirng the past two months that many hard-number stats for the second-quarter which directly impact GDP have been running not only below 4Q14, they’ve also been running below 1Q14, implying that all of the growth seen in the past three quarters has been reversed.
I’m not saying that it’s going to be reflected in today’s result, but I’m hard-pressed to see why it shouldn’t be. If it is, today’s result will be a big “surprise” to the downside.
I will update the graphic below as soon as I can after the numbers appear.
8:35 a.m.: HERE IT IS (full text version) —
Real gross domestic product — the value of the production of goods and services in the United States, adjusted for price changes — decreased at an annual rate of 0.7 percent in the first quarter of 2015, according to the “second” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.2 percent.
The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, real GDP increased 0.2 percent. With the second estimate for the first quarter, imports increased more and private inventory investment increased less than previously estimated (for more information, see “Revisions” on page 3).
The decrease in real GDP in the first quarter primarily reflected negative contributions from exports, nonresidential fixed investment, and state and local government spending that were partly offset by positive contributions from personal consumption expenditures (PCE), private inventory investment, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
Those opposing the trade pact under consideration in Washington — how can you not be opposed, when the administration won’t let the public know what’s in it? — would appear to have gained a bit of leverage, given that majority of the revision occurred because of a spike in the negative effect of imports. The overall net exports result of -1.90 points is the worst in at least the past 12 quarters (that’s how far back today’s release goes).
UPDATE: Wow, that -1.90-point impact of net exports ties for the worst since the second quarter of 1985. The most recent worse result is -2.31 points in the first quarter of 1984. That was in the early stages of the Reagan boom (it was the last of four consecutive quarters showing annualized growth of over 8 percent), and was likely due to the need to import many items simply because our manufacturing sector couldn’t grow fast enough to keep up with demand.
That surely isn’t what’s happening now.