Rough GDP

by Jeffrey P. Snider
Alhambra Partners

The advance estimate for second quarter GDP came in lower than expected. At just 1.211%, the anticipated rebound from the dreadful winter failed to materialize in any significant way. Worse, benchmark revisions now suggest that GDP has been around 1% for three straight quarters; Q4 2015 was revised down from 1.377% to just 0.869%; Q1 2016 was revised back 0.831%.

Most of the benchmark revisions instead focused on seasonality, a particularly troubling result since it can only reduce faith in the statistical processes while at the same time further confirming what we have charged all along – that this economy is very different and thus statistics that were designed for “normal” circumstances are largely inappropriate.

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