The estimated first quarter growth in our Gross Domestic Product (GDP) has been adjusted downward, by a whopping two-thirds.
Is this true? Because, if it is, the economy, while not in bad shape, is in significantly less good shape than anticipated.
From Jeff Cox’s article at CNBC:
The Federal Reserve of Atlanta has had to walk back, in a big way, its headline-making forecast that the first quarter would feature eye-popping economic growth.
Where back in late January the central bank district was calling for a 5.4 percent GDP gain, it released a reading Wednesday for its widely followed GDPNow tracker that slashed that projection all the way down to 1.9 percent.
The Republican tax legislation has put more money in most people’s pockets. Add to that excellent unemployment numbers combined with strong overall economic growth and you have a blockbuster year.
Subtract the strong economic growth and maybe the year isn’t as blockbuster as it seemed it would be.
If this also results in a turnaround for unemployment – i.e. job growth doesn’t keep pace with population – that is bad news for the economy. Simply put, people don’t get more money in each paycheck if they don’t get a paycheck.
What does this mean to the mid-term elections in November?
If unemployment levels stay low, it probably doesn’t mean very much. But if they start rising, Democrat will have a salable issue: “Republicans put us in trillions of dollars more debt, and the economy got worse, not better, just like we said it would”.
That would be disaster for Republicans.
And if the data turn bad enough, it could even mean a possible loss of the senate too – which would be cataclysmic disaster.
I doubt any of this is going to happen. But it could. And if it does, the USA will have very different governance next year.
Stay tuned.
When that report came out I commented on this blog that it would be revised down.
5.4% growth is unheard of but not a bad way to make things look bad when it has to be adjusted down.
Let’s see how many reports we get on this “downturn”.
How do you make 2% growth in GDP look bad?
Report an estimate that it will be 5.5%.
Now instead of reporting the economy grew 2% they can report that the numbers came in -3.5% for the first quarter. Lets see how many “journalists” report it that way.