Q1-2016 Real GDP Revised Up to +0.8%; Economy Already Recovering from Mini-Recession
The first estimate of Q1-2016 GDP was +0.5%, and that was revised up slightly to +0.8%. The concerns about recession are being reduced lately with some better economic news that show the economy on its sluggish pattern of sub-par growth in the +2% range, well below the post-WW2 average of +3.3%. As noted many times, there are numerous economic indicators that have yet to reach their pre-recession levels. Since this pattern has been so long in duration, even non-money denominated statistics, such as employment, have to be adjusted by population growth to discern true underlying levels. The chart shows Real GDP on a more conservative year-to-year basis as reported and with the volatile effects of inventory changes removed. The economy still seems to be digesting some long-term inventory rebalancing, some of which is related to global currency and other economic issues. The slowdown of the first quarter still seems to be limited to the first six weeks of the year. At the time of this writing, the Atlanta Fed's GDPNow estimate of Q2-2016 is at +2.5%. While that is a disappointing level, it is consistent within the lackluster level of economic growth that has come to be known these past years as “new normal.” Since 2011, real GDP has averaged only 2%. The difference in the average may not seem a lot, but a 2% annual growth rate will result in an economy doubling in size in 39 years; at 3.3%, it doubles almost 16 years sooner.
The first estimate of Q1-2016 GDP was +0.5%, and that was revised up slightly to +0.8%. The concerns about recession are being reduced lately with some better economic news that show the economy on its sluggish pattern of sub-par growth in the +2% range, well below the post-WW2 average of +3.3%. As noted many times, there are numerous economic indicators that have yet to reach their pre-recession levels. Since this pattern has been so long in duration, even non-money denominated statistics, such as employment, have to be adjusted by population growth to discern true underlying levels. The chart shows Real GDP on a more conservative year-to-year basis as reported and with the volatile effects of inventory changes removed. The economy still seems to be digesting some long-term inventory rebalancing, some of which is related to global currency and other economic issues. The slowdown of the first quarter still seems to be limited to the first six weeks of the year. At the time of this writing, the Atlanta Fed's GDPNow estimate of Q2-2016 is at +2.5%. While that is a disappointing level, it is consistent within the lackluster level of economic growth that has come to be known these past years as “new normal.” Since 2011, real GDP has averaged only 2%. The difference in the average may not seem a lot, but a 2% annual growth rate will result in an economy doubling in size in 39 years; at 3.3%, it doubles almost 16 years sooner.
