There’s a great old blues song about how some guy or gal steps out on their partner just before said partner scores big–here’s the great BB King’s version of Might Have Made Your Move too Soon.
I thought of that song this AM when we learned that GDP growth was significantly revised down for the first quarter, from 2.4% to 1.8%. From BEA:
The downward revision to the percent change in real GDP primarily reflected downward revisions to personal consumption expenditures, to exports, and to nonresidential fixed investment that were partly offset by a downward revision to imports.
The percent changes just noted are annualized quaters and OTE’ers know I like to smooth out some statistical noise by looking at year-over-year changes. That’s what the figure below shows for real GDP and for the core price index (PCE) that the Fed apparently weights heavily in their assessment of price pressures. I see deceleration.
Now, I’m a simple guy. I see trends like this and once again scratch the aging head, wondering why the central bank would start talking about reeling in their stimulus, especially given that they’re the only game in town, what with Congress off in la-la-land. Ben and co. are deeper than me…they’re looking ahead, peering around corners, fretting about well-anchored inflation and asset bubbles. And as I’ve stressed, their first move isn’t taking away the punch bowl; it’s reducing the size of the ladle.
Still, all that said, it may be the case that the Fed chair and the bluesman don’t just share the same initials. BB might have made his move too soon.