Someone Is Dead Wrong About The Economy

As we reported earlier, for some today's economic humiliation of a -1.0% GDP print was merely more good news, and as Goldman announced, weaker than expected Q1 GDP will merely lead to a greater than expected rebound in Q2 GDP.

Here are some other takes:

  • ING: “Overall, this isn’t a terrible outcome”; Sees 2Q GDP at 4.5% annual rate "with inventory rebuilding likely to play its part"
  • Strategas "GDP -1%, old news....mostly noise"
  • Bank of Tokyo's Chris Rupkey: "2Q growth seen at nearly 4%... Weak 1Q is stone cold dead as an indicator of where the economy is headed."
  • Newedge: "Prospects for the near future remain relatively optimistic" Sees GDP accelerating to “around 3%” in 2Q as well as second half of year

And of course, the "best" take comes from the White House economic advisor Jason Furman, who said that March, April data "provide a more accurate and timely picture of where the economy is today” and show recovery from recession... A recession which ended 5 years ago mind you. He adds that GDP figures can be volatile; “it is important not to read too much into any one single report.” Especially if the report shows a 2% contraction when excluding the benefits of Obamacare.


All of these "bullish in the face of adverse data" opinions are what we would dub the equity market's take: ignoring hard data, and betting on the Fed's balance sheet and hope for the future (and a blemish-free weather forecast in a priced to perfection and centrally-planned economy of course)


And here is the non-equity market take:

FTN, whose 1st bullet takes the prize today:

  • Negative GDP, as reported in 1Q, is “rare for expansions,”
  • “The growth trajectory is flatter than normal, a consequence of an ongoing credit squeeze that has dragged on so long”
  • 1Q inventory decline suggests 2Q GDP rebound of 3.8% annual rate
  • However, “don’t be fooled into thinking -1% was an anomaly and 4% is the new baseline”
  • Drop in 1Q corporate profits dashes hopes for increased capital spending this year

GMP, Adrian Miller: "After 1Q GDP contraction, 2Q data has been very much mixed with the jury out on near-term growth momentum,”


  • GDP shows economy lost ground this winter; so far, little indication will be huge pickup in 2Q home sales to make up for 1Q’s “lethargic” housing mkt, says Nela Richardson, Redfin chief economist.
  • Low inventory, rising prices continue to be “significant headwinds” to housing demand
  • Homebuyer demand in many areas also hurt by affordability pressures, stagnating median incomes that haven’t kept up with inflation

Bottom line: someone is dead wrong on the economy, but we are glad that the weathermen formerly known as economists are putting all these timestamps out there in the public domain. Because we eagerly look forward to seeing just what the scapegoat will be when Q2 GDP mysteriously fails to soar to 4%. And judging by what the bond market is doing, the only place that may see 4% growth in Q2 is China (net of all the fabricated data of course).