There was some hope that last Friday's unemployment report and the GDP report of the prior Friday would show some positive direction for the economy. That longing for directional clarity that all managers have has to be postponed yet again. It's another affirmation that owners and managers have to focus on what they do, what they can control, and navigate what's ahead of them. Customers matter more than backward-looking economic data that are based on estimates of estimates and then subject to revision. On that note, I am pleased to offer our latest statistical entertainment for the week.

GDP was +5.7%, but the surge was mainly from the rebuilding of inventories. What that meant was that businesses had cut back on inventories when business was slow, and they had cutback hard. The pendulum did its swinging, and then businesses were able to finally detect what the real underlying levels of demand were. In the fourth quarter, they started filling those inventories in again. Accounting for this, core GDP growth was probably between 2% and 2.5%. But those statisticians have it in for us again: they will revise this number two more times, once this month and then again in March. But wait, there's more! They will revise all of last years GDP, and perhaps many years back again this July. I recently discussed a better way to look at GDP and perhaps a peek at that is in order in case you missed it.

The GDP report has been foreshadowed by the Institute for Supply Management's monthly manufacturing report. Last week's report was quite good, and the report has been getting better in recent months as these inventories were building up again. But those good reports have not really filtered into the non-manufacturing sector. That ISM report is still showing some serious problems picking up steam. Where the manufacturing report shows increased hiring (confirmed by Friday's report from the Bureau of Labor Statistics), the non-manufacturing report shows more contraction.