2014 was supposed to be the year that the economy finally broke out of its subpar, post-crisis pace of growth. But the first few months of the year were a big disappointment, and in fact Q1 GDP was decidedly negative.
Of course, the economic bulls had an excuse for this: Weather. It was well known that there was an unusual amount of cold and snow at the start of the year, and that that kind of weather keeps people home.
So this spring became a moment of truth for the economy. If the data stayed bad through spring, that means that meant that there was something deeper wrong with the economy beyond the weather. If Spring was strong, then it means the Q1 weakness was all about the weather, and that the notion of a breakout in the economy was still plausible.
Well, spring is here. And the economic snapback has arrived.
The data out just today couldn’t be more clear.
Every major automaker that sells in the US market today said that May sales came in way better than expected.
Consumers are feeling increasingly optimistic.
Both Hamilton Place Strategies and Gallup said in their regular tracking survey of consumers that optimism has hit its highest level of the year.
Meanwhile, direct surveys of retail spending show the highest pace of activity since last year.
And there’s more!
Morgan Stanley says there was a huge surge in its business conditions survey.
So the Spring economic snapback is here, as the economy unburdens itself from the terrible weather.
Of course this doesn’t end the debate. The strong May conditions could be temporary gains, and simply the result of some pent up demand. And it might all fade again.
But the economy just passed at least one test, bouncing back from the horrible weather, proving that the bad numbers we saw in Q1 were indeed temporary.