OK, I admit that just this AM I said I was less bullish on the current US economy than some people, but that doesn’t mean I’m going to defenestrate over the negative revision to 2014Q1 real GDP growth from about zero in the first report to -1% in the revision out this morning.
–First, OTEers well know to discount the bouncy quarterly changes. The figure above plots these quarterly changes (the bars) against year-over-year changes (the line). The line shows we’re still slogging it out at around trend growth (~2%).
–The crap weather in Q1 always gets mentioned as part of this story. I agree, but weather didn’t suck 3 ppts off of growth (2-3=-1). More important, though partially weather-related stories include: large inventory draw downs (that will likely bounce back), weak investment (residential and non-res), and the trade deficit.
–The leaves consumer spending, which was solid, contributing 2.1 points to growth in quarter. Take out inventories and trade and the quarterly growth rate was 2% (that’s final sales of domestic product).
End of the day, what I wrote earlier this morning very much holds, at least as I see it, and next quarter will almost certainly bounce back somewhat from this lousy report. But the problem isn’t the aberrant -1% quarterly change. It’s the fact that US GDP got back to something like trend growth rate before making up the ground lost in the great recession. I see no downturn on the horizon–I do see a continued slog.