Bloomberg is a tad more optimistic, but not much: U.S. Economy Shrinks for First Time Since 2011; Pent Demand Suggests Temporary Setback.
Key excerpt from CNBC:
The U.S. economy contracted in the first quarter for the first time in three years as it buckled under the weight of a severe winter, but there are signs activity has since rebounded.
It was the worst performance since the first quarter of 2011 and reflected a far slower pace of inventory accumulation and a bigger than previously estimated trade deficit.
A pickup in receipts at retailers, stronger manufacturing and faster job growth indicate the first-quarter setback will prove temporary as pent-up demand is unleashed. Federal Reserve policy makers said at their April meeting that the economy has strengthened after adverse weather took its toll.
“The good news is that the first quarter is over, it was a difficult one for the U.S. economy,” said Ryan Sweet, senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “I wouldn’t worry too much about the decline, it’s mostly driven by less construction spending and less inventory accumulation. This quarter should be a good one.”
Oddly enough, in 2012 I remember being told that if I voted for Mitt Romney, that unemployment would stay above 5% and economic growth would go in the crapper. And look – they were right!
I think both articles may have one good point; the bad winter did hurt retail movement, and there may be some rebound now that spring has well and truly sprung and people are moving about more. But that’s not a major move, and the economy remains in an anemic growth cycle; really anemic if you remember the Roaring Eighties.
And we may be in for a major market move, too. Excerpt:
Of these (indicators), the most important will likely be the first-quarter GDP due on Thursday. The last estimate was for growth of 0.1%, while expectations for the revision are a -0.6% decline in growth for the first quarter. A decline here would be an unwelcome development, as two consecutive quarters of negative GDP is the official definition of recession. While this will probably be blamed on bad winter weather, a slip into recession could easily trigger the next “Minksy moment” and escalate market volatility. I remain cautious as we enter the lazy, hazy, crazy days of summer.
Could that presage a crash? It’s hard to tell, but the Fed can’t keep pumping cheap money in to the economy forever – and when they stop, a major adjustment is inevitable. See Stein’s Law.