From the Desk of Robert Dye

This morning, the Bureau of Economic Analysis released their third estimate of first quarter 2015 real GDP growth. It now shows a -0.2 percent annual rate, revised up from the previous estimate of -0.7 percent. The initial estimate, released at the end of April, showed +0.2 percent growth. At the end of July, the BEA will release their annual benchmark revision to GDP data, meaning that we will see another revision to the somewhat controversial Q1 GDP number. That “final final” estimate may yet show a small positive real GDP growth rate for the quarter. When GDP growth is clearly positive, or clearly negative, revisions to the data generally do not significantly change our view on the economy. Now, however, a small negative growth rate may be revised to a small positive rate, and that can change our view on the economy. The revisions to Q1 GDP give us the perfect opportunity to mix a metaphor. It is as if we are looking through a rearview mirror on the economy, darkly. Not only are we looking backward, but the view itself is obscured by the always-imperfect mechanisms for deriving the GDP data. The example of the Q1 GDP data reminds us to always take a broad view of economic data, and not to overanalyze any particular number in isolation.  Through mid-June we can say that job growth is strong, home sales are improving, auto sales are robust and the strong majority of U.S. economic indicators are consistent with an economy that is gaining momentum.

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