Friday, September 26, 2014

Final revision 2Q GDP: 4.6%: you're reading the right blog

 - by New Deal democrat

As you probably already know, 2Q GDP was revised higher again, to 4.6%  This equals the best quarterly reading since the economic recovery began 5 years ago.

Back in June I wrote that the strong rebound in the Weekly Indicators I track were forecasting such a result:
Now here is a thought experiment:  what if Q2 YoY GDP reflects that same trend? ....
....If Q2 is up only 2% YoY from Q2 2013, that will be $15.99, a +1.1% increase from today's Q1 number, or +4.4% q/q annualized.  If it were to return to the increasing trend line of +1.33% quarterly real growth from the prior 3 quarters of 2013 it had before Q1 2014, that would be $16.31, a +3.1% increase, or +12% q/q annualized!!! (not gonna happen, but worth pointing out). 

By no means do I claim any expertise in calculating GDP, but if the strong YoY readings I have seen in the last couple of months in my weekly column show up in Q2 GDP, then I wonder if a +4% or even +5% Q2 GDP is in the cards.
 So, as I say from time to time, you're reading the right blog.

A couple of closing comments:  on the negative side, even with this revision, the average GDP growth for the first half of the year was only 1.25%.  On the positive side, when we track the YoY%
change in GDP growth, it appears that there has been a slowly rising trend since 2011:

It's still worth noting that before 2000, 3% or higher GDP growth was the norm.