“We think of intuition as a magical phenomenon—but hunches are formed out of our past experiences and knowledge. So while relying on gut feelings doesn’t always lead to good decisions, it’s not nearly as flighty a tactic as it may sound.”

At a popular nightspot in Dallas years ago, my wife suddenly said “we have to leave now.”  In the newspaper the next day, we read about the riot that broke out shortly after we left.  She just knew something was wrong.

That’s the way I feel about the latest GDP reading, which showed economic growth slowed to only 0.7% in the first quarter, down from 1.7% in the fourth quarter.  The preliminary data showed the turndown was primarily in consumer spending.  This is despite the robust level of consumer confidence  Digging deeper, it looks like a slowdown in auto sales, which has declined for four straight months pulled down overall consumer spending .  But, I just know something else is wrong.

For the last three years, GDP growth has fallen suddenly in the first quarter, only to bounce back in the second and third quarters.  There is a problem with the data — maybe in the collection of data, selection of the data, smoothing of the data, aggregation of the data, or analysis of the data.  Having confidence in the data is important, as politicians love to attribute partisan motivations to data.

If you strip out the impact of changes in trade and inventory replacement, the economy grew at a more routine 2.2%.  Is there no way to annualize this data or adjust trade for dollar strength?  Apparently, we used to handle this differently.  How has it changed during the last three years?

Just because I cannot put my finger on the problem doesn’t mean there is no problem.  Whether you call it an educated guess or intuition, something is wrong with one of our most important economic datapoints.