Why That US GDP Report Actually Wasn't That Bad

The GDP report just came out and it was a big miss.

In Q1, the economy grew only 0.1%, rather than the 1.2% that was expected.

But really the report won’t be a big deal.

First of all, we know that there were all kinds of issues due to weather.

Check the table below, and direct your eyes to the far right column, under 2014.

You can see that personal consumption boomed 3.0%, one of the best numbers in years. This is real end-demand without which the economy has no hope.

Where the economy was very weak was on private investment, which was known to be weak due to the bad weather.

Meanwhile, private inventories fell 5.7%. That’s a huge drop, but inventories always go back and forth, build ups and drawdowns. So after two straight quarters of drawdowns, now it’s bound to back up.

There was also a huge drop in exports, which doesn’t seem likely to continue, given the stabilizing global economy.

So bottom line: The economy isn’t doing great, but this report isn’t that bad.

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