“The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2015 is 0.2 percent.”
Month: March 2015
“For the second straight month, we have a terrible economic data point out of the Midwest.”
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“With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year.”
With recent data showing anemic activity, economists are expecting more subdued growth in the first quarter of this year.
Everybody on Wall Street and in the mainstream financial media said that lower oil was going to explode GDP. Some sensational reports even went as far to say that for every $0.10 a gallon the price of gas drops, it adds another 0.2% to GDP.
What a snow job that was.
Fourth quarter GDP growth was unrevised. The economy grew 2.2 percent in the fourth quarter compared to the second estimate of 2.2 percent and the advance estimate of 2.6 percent. Expectations were for 2.4 percent.
Could the U.S. economy be seeing a repeat of last year’s winter contraction? The latest estimates are moving in that direction, though they’re still in positive territory.
This could be much worse than last year. Last year, while GDP was down because of the polar vortex and abnormal winter weather, this year, the GDP is being revised lower because of deteriorating economic data spurred on by a rising U.S. dollar.
The U.S. is one of the biggest exporters in the world. The U..S. dollar is up more than +18% since March 25, 2014. That is REALLY a big move for a currency. It means that the price of U.S. goods on the world market have gone up +18% over the last 12 months. Think about that. During a time when our biggest trading partners like Europe, China, Japan, and the UK, are rolling over and looking to cut costs where they can, we are raising our prices! In the business world that would be considered suicide. On top of that, the U.S. dollar is rising on speculation of the first Federal Reserve rate hike since June 2006. Even as the economy continues to slow, the Fed is saying it will hike rates by the end of 2015.
These and a few other slowing economic data points make this year’s GDP contraction much different than last year’s in my opinion.