Is This Summer's GDP Slowdown Temporary?
Forecasters are looking for the U.S. government to report on Friday the U.S. expanded at a healthy +3.0% pace in Q1 after a +0.4% gain in Q4.
Don’t put too much stock into this backward-looking and preliminary real GDP report.
Yet, a few signs of another mid-year slowdown are already evident
Softer consumer spending,
A barely growing manufacturing industry,
A slow March pace of private-sector hiring,
Recent softness in existing home sales
The same forecaster’s outlook for Q2 shows growth slowing to +1.8%.
Sequestration cuts have yet to kick in.
The chart below shows a real GDP view of the last 10 years. We now have a real economy that is +2.7% greater in size than in 2008.
My RTI questions for you:
A similar seasonal pattern occurred in 2012 and 2011.
Is a summer seasonal slowdown a permanent feature of our economy now, or is this a more serious event in the 2013 context, given sequestration?
Will the stock market care this time around, or is the overall higher level of real GDP going to push the S&P 500 to new highs?
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