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By New_Deal_democrat April 29, 2015 12:12 pm
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US Q1 GDP: poor, as expected, with silver linings

First quarter GDP was poor, but at least remained positive.  This was no surprise, as readers of my Weekly Indicators columns know.  Weekly measures of rail transport, steel production, and some shipping measures were all poor, in addition to consumer spending, for virtually the entire first quarter.  This showed up in monthly measures of industrial production and retail sales.  This is also vindication for the Atlanta Fed's "GDPNow" calculator, which as of now was right on target.

As bad numbers go, however, this one had some silver linings.  First of all, of course, it was expected.  Secondly, the sources of the poor number were also as expected.

The strong dollar hurt exports:

The steep decline in gas prices hit the Oil patch, as shown in the CapEx measure of real private nonresidential fixed investment:

Two modest good points included as better-than-expected number in personal consumption expenditures:

And real private fixed residential investment (housing), a long leading indicator, also inched up to a new post-recession record:

The housing news in GDP was mixed, however, as housing as a share of GDP, although moving in the right direction, is still below its Q3 2013 high:

This means that housing is no longer a primary driving force in the economic expansion, and this tends to happen after the mid-point of the cycle.

Although first quarter GDP confirms that it is fair to consider the US industrial sector as being in a shallow recession, consumers -- who through March were saving their gas windfall -- are still a positive, and there are signs that, as expected, they are beginning to spend more in April.

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