The Wall Street Journal reports that “private forecasting firm Macroeconomic Advisers on Thursday said its monthly estimate showed GDP fell an inflation-adjusted 1% in March, the largest drop since December 2008, ‘when the U.S. economy was in the throes of recession,’ the firm said. Monthly GDP had climbed 0.3% in February and ticked up 0.1% in January after falling 0.4% in December, the firm said.”
Now there is a big caveat here, according to the firm. The labor dispute at West Coast ports led to a large, but temporary, drop in exports. So the GDP number overstates any weakness in the economy. But, but, but … even with that addendum, things aren’t going gangbusters right now. First, it now looks like the economy contracted by at least a full percentage point in the first quarter. Second, second-quarter GDP estimates are also coming down. JPMorgan, for instance, yesterday cut its forecast to 2.0% from 2.5% and noted, “First half GDP growth averaging 0.5% is pretty disappointing.” Third, the WSJ’s economic survey now pegs full-year GDP growth at 2.2%, a bit slower than last year’s 2.4%. Fourth, the Fed’s Labor Market Conditions Index — Janet Yellen’s jobs dashboard — “fell into negative territory in March and April for the first time since a brief spell in 2012,” according to Goldman Sachs. So perhaps the weak growth is leaking into the labor market, though real-time indicators are more positive — for now.
In any event, 2015 is shaping up as another year of stagnation rather than (finally) acceleration.
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