Running off to a meeting so must be brief, but this earlier post gives you the background you need to understand this here one. As you may have seen, real GDP fell 0.7% according to this morning’s revision of first quarter data.
But there’s a potential problem of “residual seasonality” in these Q1 data (see link above for explanation). One way to deal with this possibility to rerun the series through the same seasonal adjuster used by BEA. If you did that with the first release of 2015Q1 data, instead of getting a 0.2% annualized increase in 2015q1 over the previous quarter, you got 1.8%, a rate more in keeping with what I believe to be the underlying growth rate.
So I took that same approach using this morning’s release of the revised Q1 data, and got 1.3% versus the -0.7% in the release. I’ve also stressed the importance of looking at year/year growth rate as any bias in today’s Q1 data was likely there a year ago as well, so you’re implicitly adjusting for it. By that metric, real GDP is up 2.7% over past year.
That’s a lot of different numbers to throw at you before 9am (and I’m in a hotel room without coffee so take this all with a grain a salt), but the bottom lines are a) I’d discount the -0.7% pretty heavily, and suspect high-frequency growth is slightly below trend, and b) an important reason for that slippage is the worsening trade deficit driven by the strong dollar. Net exports shaved a big 1.9 ppts off of growth in the quarter.