I have a friend in the stock rackets. I nicknamed him “green light” years ago. The reason is he always has a reason to buy stocks. If the market is falling, it is a great time to bargain hunt. If the market is soaring, you have to ride the wave. A nuclear strike incinerating NYC and the markets would not be enough to discourage the guy. He’s not unusual. That’s the business. That’s why you should never take advice from stock brokers or gamblers.
CNBC is the quintessential green light operation. No matter what, they can see the bright side. Today’s revised Q1 GDP is a good example.
The U.S. economy contracted in the first quarter for the first time in three years as it buckled under the weight of a severe winter, but there are signs activity has since rebounded.
Yeah, suddenly we’re all hot house flowers incapable of handling a little snow.
The decline in output, which also reflected a plunge in business spending on nonresidential structures, was sharper than Wall Street’s expectations. Economists had expected the revision to show GDP contracting at a 0.5 percent rate.
The economy grew at a 2.6 percent pace in the fourth quarter. U.S. financial markets are likely to shrug off the report, given the temporary factors that weighed down on growth and the fact that economic activity is rebounding.
Data ranging from employment to manufacturing suggests growth will accelerate sharply in the second quarter.
Economists estimate severe weather could have chopped off as much as 1.5 percentage points from GDP growth. The government, however, gave no details on the impact of the weather.
Weather could have been a cause. Magic evil leprechauns could be the cause too. We don’t know, but let’s go with weather because we don’t think it was leprechauns.
Businesses accumulated $49.0 billion worth of inventories, far less than the $87.4 billion estimated last month.
It was the smallest amount in a year and left inventories subtracting 1.62 percentage points from first-quarter growth. But inventories should be a boost to second-quarter growth.
While the decline in exports was not as severe as initially thought, import growth was stronger. That resulted in a trade deficit that sliced off 0.95 percentage point from GDP growth.
A measure of domestic demand that strips out exports and inventories expanded at a 1.6 percent rate, rather than a 1.5 percent rate, indicating underlying strength in the economy.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 3.1 percent rate. It was previously reported to have advanced at a 3.0 percent pace.
Spending was boosted by the Affordable Healthcare Act, which expanded healthcare coverage to many Americans. Consumer spending had increased at a brisk 3.3 percent pace in the fourth quarter.
Business spending on nonresidential structures, such as gas drilling, contracted at a 7.5 percent rate. It had previously been reported to have increased at a 0.2 percent pace. The report showed corporate profits after tax plunged at a 13.7 percent rate, the biggest drop since the fourth quarter of 2008.
Let’s see. Demand was higher, but profits were smaller. Business, for some reason, reduced inventories. But wait. Consumer spending was not higher on things people want like new TV’s and cars. It was higher for stuff they don’t want like health care. My goodness. Does anyone even bother to read the copy before it goes to press?