GDP down 2.9% 1st quarter

[TGHusker]

Part of the blame goes to the weather for this shrinkage of the economy. The article states that other factors may be in play due to the size of the shrinkage. It then talks about

other issues that are contributing to the slowing of the economy.

 

Is this something to be concerned about?

 

Could economic policy be the main cause? (High # of people not in the labor market, cost of ACA and other regulations, drag of high govt debt?) Or are forces outside of

current policy creating this down turn? I'm not an economist - so I'd like to hear from those who are strong in this area to explain why we have a retraction of the economy

this far into the 'recovery'.

 

 

 

 

http://www.cnbc.com/id/101787838

 

 

Part of the article:

 

The U.S. economy contracted at a much steeper pace than previously estimated in the first quarter, but there are indications that growth has since rebounded strongly.

The Commerce Department said on Wednesday gross domestic product fell at a 2.9 percent annual rate, the economy's worst performance in five years, instead of the 1.0 percent pace it had reported last month.

While the economy's woes have been largely blamed on an unusually cold winter, the magnitude of the revisions suggest other factors at play beyond the weather. Growth has now been revised down by a total of 3.0 percentage points since the government's first estimate was published in April, which had the economy expanding at a 0.1 percent rate.

The difference between the second and third estimates was the largest on records going back to 1976, the Commerce Department said. Economists had expected growth to be revised to show it contracting at a 1.7 percent rate. Sharp revisions to GDP numbers are not unusual as the government does not have complete data when it makes its initial and preliminary estimates.

[BigRedBuster]

it will be really interesting to see what the second quarter comes back as. The weather has been much better during most of that quarter. If GDP rebounds then it's more likely the weather. If not, then better be looking at other factors.

 

I'm guessing that maybe it rebounds.

 

It is always interesting for me to watch government economic reports. More often then not, we (my company) can basically predict what they have to say.

 

Example, when our raw materials increase heavily, almost always they will come out later and claim higher inflation. When I see orders slow down, they will claim the economy is slowing and GDP is low. When I see orders pick up, GDP will tend to increase. When I start seeing major pricing pressures in the market then they will tend to come out and say the economy is shrinking or unemployment bumped up or housing slowed down. I'm not saying it's perfect but it correlates well enough to make it interesting to watch.

 

For us, last fall was "ok". We had a decent mid winter. Late winter and early spring stunk it up. Most of the construction industry was completely at a stand still in most of the country due to weather. Since the weather broke though, it's going strong. So, I'm guessing the second quarter is going to be a stronger report than first quarter.

 

Now, we will see how my prediction goes.

[TGHusker]

it will be really interesting to see what the second quarter comes back as. The weather has been much better during most of that quarter. If GDP rebounds then it's more likely the weather. If not, then better be looking at other factors.

 

I'm guessing that maybe it rebounds.

 

It is always interesting for me to watch government economic reports. More often then not, we (my company) can basically predict what they have to say.

 

Example, when our raw materials increase heavily, almost always they will come out later and claim higher inflation. When I see orders slow down, they will claim the economy is slowing and GDP is low. When I see orders pick up, GDP will tend to increase. When I start seeing major pricing pressures in the market then they will tend to come out and say the economy is shrinking or unemployment bumped up or housing slowed down. I'm not saying it's perfect but it correlates well enough to make it interesting to watch.

 

For us, last fall was "ok". We had a decent mid winter. Late winter and early spring stunk it up. Most of the construction industry was completely at a stand still in most of the country due to weather. Since the weather broke though, it's going strong. So, I'm guessing the second quarter is going to be a stronger report than first quarter.

 

Now, we will see how my prediction goes.

What kind of business are you in? Seems like they should be monitoring your business as a 'leading economic indicator'!

[StPaulHusker]

Weather has definitely been a factor.

 

Being in the construction supply business, I can tell you that things were very, very slow Q1. Other than our typical Spring pre-orders that we get every year, there wasn't a whole lot more to get excited about.

 

Now that we are at the end of Q2, things are a better but if it doesn't stop raining and flooding so people can get to work, things are going to suck.

[BigRedBuster]

 

it will be really interesting to see what the second quarter comes back as. The weather has been much better during most of that quarter. If GDP rebounds then it's more likely the weather. If not, then better be looking at other factors.

 

I'm guessing that maybe it rebounds.

 

It is always interesting for me to watch government economic reports. More often then not, we (my company) can basically predict what they have to say.

 

Example, when our raw materials increase heavily, almost always they will come out later and claim higher inflation. When I see orders slow down, they will claim the economy is slowing and GDP is low. When I see orders pick up, GDP will tend to increase. When I start seeing major pricing pressures in the market then they will tend to come out and say the economy is shrinking or unemployment bumped up or housing slowed down. I'm not saying it's perfect but it correlates well enough to make it interesting to watch.

 

For us, last fall was "ok". We had a decent mid winter. Late winter and early spring stunk it up. Most of the construction industry was completely at a stand still in most of the country due to weather. Since the weather broke though, it's going strong. So, I'm guessing the second quarter is going to be a stronger report than first quarter.

 

Now, we will see how my prediction goes.

What kind of business are you in? Seems like they should be monitoring your business as a 'leading economic indicator'!

 

We manufacture construction products. We sell mainly into the residential housing market.

[StPaulHusker]

 

 

it will be really interesting to see what the second quarter comes back as. The weather has been much better during most of that quarter. If GDP rebounds then it's more likely the weather. If not, then better be looking at other factors.

 

I'm guessing that maybe it rebounds.

 

It is always interesting for me to watch government economic reports. More often then not, we (my company) can basically predict what they have to say.

 

Example, when our raw materials increase heavily, almost always they will come out later and claim higher inflation. When I see orders slow down, they will claim the economy is slowing and GDP is low. When I see orders pick up, GDP will tend to increase. When I start seeing major pricing pressures in the market then they will tend to come out and say the economy is shrinking or unemployment bumped up or housing slowed down. I'm not saying it's perfect but it correlates well enough to make it interesting to watch.

 

For us, last fall was "ok". We had a decent mid winter. Late winter and early spring stunk it up. Most of the construction industry was completely at a stand still in most of the country due to weather. Since the weather broke though, it's going strong. So, I'm guessing the second quarter is going to be a stronger report than first quarter.

 

Now, we will see how my prediction goes.

What kind of business are you in? Seems like they should be monitoring your business as a 'leading economic indicator'!

 

We manufacture construction products. We sell mainly into the residential housing market.

 

What do you manufacture specifically?

[BigRedBuster]

 

 

 

it will be really interesting to see what the second quarter comes back as. The weather has been much better during most of that quarter. If GDP rebounds then it's more likely the weather. If not, then better be looking at other factors.

 

I'm guessing that maybe it rebounds.

 

It is always interesting for me to watch government economic reports. More often then not, we (my company) can basically predict what they have to say.

 

Example, when our raw materials increase heavily, almost always they will come out later and claim higher inflation. When I see orders slow down, they will claim the economy is slowing and GDP is low. When I see orders pick up, GDP will tend to increase. When I start seeing major pricing pressures in the market then they will tend to come out and say the economy is shrinking or unemployment bumped up or housing slowed down. I'm not saying it's perfect but it correlates well enough to make it interesting to watch.

 

For us, last fall was "ok". We had a decent mid winter. Late winter and early spring stunk it up. Most of the construction industry was completely at a stand still in most of the country due to weather. Since the weather broke though, it's going strong. So, I'm guessing the second quarter is going to be a stronger report than first quarter.

 

Now, we will see how my prediction goes.

What kind of business are you in? Seems like they should be monitoring your business as a 'leading economic indicator'!

 

We manufacture construction products. We sell mainly into the residential housing market.

 

What do you manufacture specifically?

 

Sorry, I don't want to get too specific about that on here.

 

We are a national company so rain and flooding in Iowa might hurt our sales there but if it's going strong in New England then we won't feel it that much. The weather earlier was just so crappy across the entire US.

[TGHusker]

I understand that this is the worse non-recession contraction in 40 years. So is a recession next?

[BigRedBuster]

I understand that this is the worse non-recession contraction in 40 years. So is a recession next?

If I had to guess, I would say, no.

 

 

Again, during the first and second quarter of every year, the construction industry is a major part of GDP. This year, it stunk. It was beyond stunk. It would even make a skunk pinch his nose.

 

If I had to guess, long term this will be a little blip on what has been a very slow increase in the economy. I think everything is pointing to that happening. Unemployment is not great but it could be worse. The feds seem to be not panicking in either direction. Companies are profitable but not just swimming in profits (No, I'm not talking about the huge mega companies that everyone thinks about. There is much more to the economy than that.) Everyone has figured out how to survive with lower sales than what they had going into 2007 or 2008. Balance sheets have been adjusted or the ones that couldn't accomplish that are out of business. Companies will slowly start hiring more people as sales slowly increase. You can't have one without the other.

 

This ship turned south really fast in 2007 and 08. It almost flipped over and sank because of it. Turning back north it's going to make a very wide easy slow turn.

[BigRedBuster]

Another thing that has me feeling better about this is that people have adjusted to higher fuel prices. Going into 2006, a large amount of the population was mortgages to the max. They might have been living in a $300,000 house but they were living pay check to pay check to make payments. Fuel prices shot up and it absolutely drained people's bank accounts. People weren't noticing how much more they were spending to fill up the car every month. Meanwhile, they still needed to pay the mortgage that they shouldn't' have had in the first place.

 

Now, those horribly thought out mortgages have mostly been foreclosed on/sold or refinanced. People have adjusted their driving to account for higher fuel prices and now they have a new normal.