First-Quarter GDP Report

The government reported today that the economy grew at an annualized rate of just 1.26% for the first three months of the year. That’s pretty weak. It’s the slowest quarter in four years.
I’m also troubled by the trend. This marks the fourth straight quarter of below-trend growth (the long-term trend is about 3%).
GDP data is very trend-sensitive. If the economy is growing by over 3%, it tends to stay that way. In the late 1990s, we had 18 straight quarters of over 2.6% growth. If it’s under 3%, it also tends to stay that way. In the early part of this decade, we had 11 straight quarters of under 2.8%.
The breakout points are very important.

Posted by Eddy Elfenbein on April 27th, 2007 at 9:53 am

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