Concern about Q2-2015 GDP continues to grow as more complete data about Q1 are reported. There is a general view that Q1 will be revised from +0.2% to 0% or a mild contraction of -0.1% to -0.3%. A bad Q1 has happened before with a strong rebound in Q2, but that does not appear to be the case now. Some data series are showing signs of contraction, the most recent being retail sales, which contracted compared to Q4-2014 in the latest data revisions.

The Atlanta Fed's GDPNow forecast of Q2-2015 GDP is now running at +0.7% (at the time of this writing). The economy is still running at a longer term growth rate of just over +2.0%, but two poor quarters could bring that assumption into question, to the downside.

Last Friday's unemployment report confirmed the continuing lack of dynamism in the economy, with the household survey showing an increase of +192,000 in employment. The labor participation rate, now getting more attention in the business press, was up 0.1 percentage points but is at the same level as last year, and is at a low level last seen in the late 1970s. The employment-population ratio is up 0.4 percentage points from last year, but has been at its current level for the last few months.