For those of you looking for a reason to get excited about the first quarter GDP report due out Friday morning, perhaps nostalgia may be just the hook you need. That's because it will mark the final economic measurement done before the government's Bureau of Economic Analysis rolls out newly calculated data in July.
"People just take the GDP number and run with it, without really looking into the details," says Peter Kenny, managing director at Knight Capital in the attached video. "It is a very complex number."
Officially, Kenny and other market watchers and economists are looking for tomorrow's report to show GDP recovering to 2.8% in the first three months of the year, from what he refers to as "stole mode" in the fourth quarter amidst election and fiscal cliff worries.
"If you look at the markets and broader indexes, they're really pricing in some fairly significant earnings power and guidance," he says of the anticipated uptick in activity.
This self-described ''old school" analyst finds the whole thing a bit Orwellian and conspiratorial. Thanks to the inclusion of the value of such ''intangibles" as intellectual property, research and development, and the creativity of artists and scientists, our economy will magically be 3%, or about $450 billion larger, when the next numbers come out in July.
"That leaves the data, at the end of the day, open to some degree of interpretation that was not there in the old way of doing things," Kenny says of the pending change in calculations.
And he's not alone. Even the head of the Commerce Department's wing in charge of these types of things says his team will be "re-writing economic history back to 1929."
What won't change is how the pace of growth is calculated, no matter what size the economy size is.