A couple of quick notes and then some thoughts that I hope I have chance to build on over time.
GDP growth came in of course at around 2.8%. But, what does that tell us? Not much.
For example, personal consumption expenditures were weak at a 2.0% growth rate, but this is largely because Services came in a 0.2% which in turn is because Housing and Utilities Services declined by 13 Billion dollars. And, that is almost certainly due to a warm winter and lower than expected heating bills.
So, what does that tell us about the direction of the economy? Essentially nothing. We can say that Housing and Utilities will likely pop back in the spring meaning that Consumption expenditures could easily grow by 2.5 – 3.0%.
However, information wise that just piles nothingness on top of nothingness. It was strangely warm today, it will likely be less strangely warm tomorrow. That’s what you get from that data.
Autos did well, but we knew that already. Indeed, expenditures on all goods did well.
There is also a bit of handwringing over the fact that inventories contributed so much to GDP growth. But, what does this tell you. Most of this is autos. During the summer there was a major slowdown in parts from Japan. So Hondas and Toyotas started getting lean on lots. Now, they are coming back. That’s inventory adjustment. But, it tells us little about the underlying economy.
The one real surprise I saw was a decline in non-residential structure investment. I am guessing this means less oil drilling or natural gas fracking, since that’s over a third of all investment in structures and it’s the entire source of growth.
Why that slowdown occurred I don’t know because Census is slow on getting construction data out. However, it will be interesting to see. A change in oil and gas extraction would be a big deal.
Companies continued to buy computers and software. Not really a shocker. Medicare and Medicaid continued to fund money to hospitals and doctors. Not much of a shocker there either.
Government was surprising rough as well and I wonder if their won’t be some revisions there.
In any case I just don’t think there is a whole lot of here, here.
As a quick note, though I can tell by the way business folks talk across twitter there is the sense that the economy is more complicated than it really is.
I mean what do you do. You probably have a house, a car, some clothes and a computer. Chances are you also eat food, sit on chairs, and have a relative who is or was in the hospital. That’s the private sector right there. If you went to school, that’s the public sector.
Done and done. There isn’t much more to it because there is just not that much to people and people are the foundation of the economy.