All Eyes on GDP Report! Really?

Last night, just before my house hopefully goes dark, (finishing first full week of school), as usual, I scrolled through the evening news stories for a last glance at what was on deck for this Friday.

Reuters leads with “GDP number…What will Bernanke’s do if GDP bad?”, NY Times… “GDP may show economy slowed even more….”, Bloomberg…”Noted economist says economic numbers failing…”

I found no fewer than eight headlines with similar titles and stories, and could have probably found more if I had tried.

Economic Numbers are important, but they are rear view mirror reports!

Rear View Mirror Report

The GDP number we are all watching (Expectations is for a 1.4% revised number, down from a mid 2% number) is for April through July of earlier this year. While important, it is very rear view mirror and may not carry as much weight as what is happening today, and what will happen throughout the rest of this year.

Many will extrapolate that the slowdown will continue leading to the double dip conversation, which is of course a possibility, but we think a normal mid recovery slowdown, rather than another downturn.

The economy has slowed and may slow more as our country continues to adjust from our last recession. We were driving at 70 MPH for many years and the new speed limit is closer to the legal 55, of which we are most likely cruising along at 40 MPH currently.

Patience, as no matter how rearview mirror the economic numbers are, if the actual revised number is much lower than 1.4%, markets may swoon, and headlines will be much more negative over the weekend.

Remember we are in a seasonally negative time with a void period of earnings, and headcount, as such, negative or positive surprises are met with higher levels of market drama!

Have a Good Day !


Comments are closed.