The GDP fell in the first quarter; what now?
According to the Bureau of Economic Analysis, the first quarter of 2014 have been analyzed, and it appears that the economy has contracted significantly more than previously estimated, declining at an annual rate of 2.9 percent, which is relative to the fourth quarter of 2013, when the real GDP grew 2.6 percent.
Despite the contraction, the DOW is up 50, and given that the slump erased the gains seen in the final quarter of last year, some believe that as quickly as we saw these losses, we could see gains next quarter, putting us back at the starting line.
But not everyone sees it that way, and some economists care saying this surprising data could spell another recession, just as the nation emerges from the economic crash that began in 2008.
Let’s face it – the GDP news is bad. But it’s not the only damning data, as exports declined 9.0 percent in the first quarter, Americans ate out significantly less in the same period, healthcare spending declined, and business orders fell for things like technologies. But on the other hand, job growth is still improving.
In other words, the economy is sending out mixed signals, which is why this GDP news has so many on opposite sides of the issue, citing various data points to portray the economy as healthy or crashing, typically dependent upon their political leanings.
How did this happen?
CNN points out that “Some economists take this GDP number with a grain of salt because it will be revised again next month when the Bureau of Economic Analysis makes historical revisions, going back to 1999.”
Fox News cites a PNC economist who dispels the idea that this is solely a weather-related dip, noting that only $15 billion can be blamed on the weather – a drop in the bucket.
The truth is that whether we’re crashing or recovering, the economy is sputtering. The White House calls the recovery “incomplete,” and it must be noted that a strong GDP in the next quarter could regain lost ground, but for now, many are flinching after being socked by the crash, and why wouldn’t they?