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What Goes Down Must Come Up

05/01/2014

Yesterday, we learned that the Gross Domestic Product (GDP) for the first quarter of this year was a pathetic 0.1%.  Does that mean the economy is going over the cliff?  No!

Take a look at this chart and you will notice how volatile this number is:


The primary reason for this is obviously the awful weather we experienced, which should give some stimulus to the second quarter as deferred purchases are made.

For the last four quarters, the average GDP growth rate has been 2.3%, which is acceptable, but given the amount of fiscal drag last year (from the lack of government spending), we should expect greater growth going forward.

Janet Yellen, Chair of the Fed, stated the economy is growing nicely — certainly much higher than 0.1%, which should be ignored.

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