Peak GDP Sets Stage for Major Economic Fail – Ep. 374

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U.S. GDP Growth Reported at 4.1%

Today we finally got the highly anticipated first look at U.S. economic growth, or really GDP growth, because the GDP is not that great a barometer of the economy.  Nonetheless, thats the one that everybody uses to measure it, and that’s the one that we’re going to talk about. Perhaps I can get into why the GDP is such a flawed measure in a different podcast; I really don’t want to get into it today.  I just want to talk about the numbers that are being spoon-fed.

Atlanta Fed Forecast of 3.8% Might Be Closer to Final Number

In any event, we got the number today, and there was initially a loth of estimates that we could just blow it away this quarter, that we could have a number north of 5%, and we got 4.1%. So, we at least are above 4%, which lets Donald Trump brag about the number being over 4%, although we’ll see how long it stays over 4%. You know, we did get a lot of data that was coming out this week, and in recent weeks.  In fact, the Atlanta Fed lowered its forecast, which at one point was as high as 5.4% and it lowered it down to 3.8% yesterday. I think that 38 might end up being more accurate than the 4.1%.  In fact, we may end up being below 3.8% by the time they make the final revisions.

Celebration May Be Premature

They actually revised the first quarter back up to 2.2%. So they revise these things constantly.  The first number is rarely the correct number.  In theory, they could revise it up but I think it’s more likely that the revision is going to be down, so the celebration is premature.

New Home Sales Lowest in 8 Months

Two numbers that came out this week that caused the Atlanta Fed to move down to 3.8%: one was new home sales.  It was the lowest in 8 months. In fact, they revised down some prior months.  I had already reported in a previous podcast the weak numbers for existing home sales, which is a bigger number because most of the homes that are bought already exist. But the ones that are being built have a bigger impact on the economy proportionately because of all the construction jobs.

Peter Schiff is an economist, financial broker/dealer, author, frequent guest on national news, and host of the Peter Schiff Show Podcast.



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