GDP Falls by 2.9% in Q1 14

Got beat to the punch while traveling.

But if you're now dependent on this site for your news, here you go.



Source

For those who are interested in these continual first quarter disappointments...Some are suggesting part of the problem rests with flawed seasonal adjustment methodologies.

US Government to review mystery of slow first quarter growth.

The Commerce Department's Bureau of Economic Analysis is developing a plan to improve its estimates. I wonder if they come up with a new method of seasonal adjustments they'll go back and restate previous years so we can compare apples and apples.

I think not.....it would make the Reagan years look even better.

Wall Street Journal

"less severe"??? is that an oxymoron?

Gosh, no update from jphelan with today's good news. This is very hard to understand!



So here goes . . . .



Source

So instead of two quarters of decline, which would be a recession, we had zero quarters of decline.

Sad day for jphelan.

But keep your chin up, Jason! There's another Bush running, and he can't wait to return to the economic policies of his brother!

The first half growth is less than 1.5% which is less than what is needed to account for population growth. Only an obama cheerleader would brag about that.

No structural issues in GDP data construction.

The BEA has completed it's initial analysis to determine if flawed seasonal adjustments were impacting its GDP Forecasts. The results were interesting. Many economists expected to find major issues in seasonal adjustments to First Quarter Estimates. Like the original estimate that started this thread. Instead they found ongoing issues with Third Quarter Estimates related to the way Defense Spending is calculated.

"The BEA refined the seasonal adjustment methods for federal defense spending, consumer spending on services, net interest and corporate profits."

"The improvements to the seasonal adjustment for defense spending found an overstating of GDP growth in the third quarter from 2012 to 2014. Third-quarter growth in 2012 was revised down by 2 percentage points to a 0.5 percent rate, with defense spending accounting for a half a percentage point of the drop".

A 2 percentage point change (80% of the total) to quarterly growth percentage....3 years after the fact...is more than a minor adjustment. It was a major error in the estimate. I hope we're not basing anything important on these forecasts.

One important statistic that was reported here regularly was GDP and revisions to GDP. Unfortunately Chilcoot hasn't posted here in a while and the significant upward revision to 2Q 2015 GDP was missed.

https://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

The re-estimate revised the initial report from 2.3% growth to 3.7% growth.....a whopping 38% change in the estimate.

Positive contributors to the solid quarter included nonresidential fixed investment, private inventory investment, State and Local government spending, Exports and Personal Consumption expenditures.

I attribute the nice quarterly gain to pent up demand from Q1's severe weather conditions and the low cost of oil finally starting to be felt in the economy by consumers and energy using businesses. The original 2.3% advance estimate was a real disappointment and the revised 3.7% estimate was a positive surprise.

The tug of war is between oil and gas users getting a big boost from declining prices and oil and gas producers cutting investment and employment. Like it or not, this country still runs on oil for the most part. Continued low oil prices is good for the overall economy even though the energy sector will be impacted negatively.

I'm betting Q3 improves even more than 3.7%. Hopefully it's the break out quarter we've all been waiting for. Watch the Fed on the rate move. They already have a pretty good idea about that Q3 number.

Hey! Maybe it's time to go buy one of them there 707 horse Dodge Challenger Hellcats. It's like 1969 again. Cheap gas and Muscle Cars!

Q2 numbers were good and the revision for Q1 is also a positive. I stand by my original statement that two consecutive quarters of negative GDP growth are, by definition, a recession. So we dodged a bullet because Q1 initial numbers were negative. However, the future remains cloudy as indicated by the slowdown in China and stagnation of commodity prices.