The Wall Street Journal reports U.S. Economy Was Weaker Last Quarter Than We Thought.

"Consumers spent less, and the housing market continued to weigh on growth," notes the Journal.

It's hard to get excited over these reports. I almost didn't bother reporting.

The second quarter will be over in three days and here we are discussing Q1.

Rick Davis at the Consumer Metrics Institute offered these Thoughts on GDP.

Major Takeaways


  1. Consumer spending for goods was still reported to be contracting during the quarter, and the reported growth in services spending weakened materially.
  2. The overall annualized growth rate for consumer spending dropped -2.15% on a quarter-to-quarter basis.
  3. Although household disposable income improved quarter-to-quarter (most likely due to the reduced withholding rates in the "Tax Cuts and Jobs Act of 2017"), most of that improvement went into increased savings.
  4. The BEA's deflators were once again boosting the headline number, in this case by +0.29%.
  5. The headline from the report should have read: "Consumer spending on goods continued to contract, while consumer spending on services was revised downward yet again." If consumers are the driving force for the US economy, a report like this should be raising major caution flags.

Muddle-through proponents have called this best, but Trump's trade policies can easily put an end to that.

I am not so sure about point number five. It's pretty clear consumer spending rebounded in the second quarter.

Housing is still lackluster.

The reports are stale. The "current" data is as of May. Reporting-wise, there is a over a month to go. For some economic reports, the quarter is only one-third over.

GDP is a very lagging indicator.

Mike "Mish" Shedlock

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