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Entries for July 2014

16
Economic Outlook and Investment Policy for 3rd Quarter 2014

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16

Real GDP in the U.S. was revised down, again, to -2.9% for Q1 2014. Consumer spending in the service sector and net exports were the major downward movers; most other elements of the figure were unchanged. Despite many of the headline data points showing positive progress, this GDP number is the biggest non-recession drop since World War II. This reading was likely an exception rather than a trend as nearly every major factor, such as consumer strength, housing, and employment, has been strong or at least steady in the most recent months. However, adjusting the annual GDP forecast for a shockingly large drop in Q1 will result in a significantly lower consensus estimate for the year. As it now stands, the GDP for 2014 will likely come in closer to 2% than previous consensus of 3% to 3.5%. Nonetheless, the Q2 GDP release will be a highly anticipated indicator of where the U.S. economy stands.

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