http://www.washingtonpost.com/blogs/wonkblog/wp/2015/04/29/the-economys-biggest-weakness-is-winter/
Winter isn't the economy's only weakness, but it might be the biggest one.
Indeed, the economy slowed to a near standstill with just 0.2 percent annualized growth in the first three months of the year, in no small part, because of the cold weather. Still, it takes a lot more than a few snowstorms to knock the economy off the 2.2 percent growth we had at the end of last year, let alone the 5 percent growth we had before that. So something else is also holding us back. The question is how much and for how long?
In other words, is this a blip or a bust?
[Read: U.S. economic growth slows to 0.2 percent, grinding nearly to a halt]
Let's start with the good news, though, since that won't take as long to talk about. The first part is that winter is over. Consumers should start leaving their homes to shop, and construction workers should start leaving theirs to build new ones now that you don't have to spend five minutes bundling up to go outside.
The second part is that the port strike is over, too. It should be easier to export things now that one of our major entrepôts isn't shut down.
And the last part, as Justin Wolfers points out, is that, for whatever reason, the seasonal adjustments the Bureau of Economic Analysis uses to calculate GDP seem to be out of whack for the first quarter. Indeed, since 2010, the economy has only grown an average of 0.6 percent in the first quarter and 2.9 percent thereafter. That's too big a difference to just be chance, which means that things probably aren't as bad as they look.
And besides, if you take a longer view, things don't even look that bad to begin with. They just don't look that good, either. GDP has actually grown 3 percent the past 12 months, and 2.9 percent if you strip out volatile inventory and trade numbers. This last one goes by the catchy name of final sales to domestic purchasers, and it should give us a better sense of the economy's underlying strength, since it only looks at the parts — government spending, consumer spending and private investment — of today's growth that we'd expect to continue tomorrow. And that, as you can see below, shows a recovery that isn't speeding up, but isn't really slowing down, either.
a massive rally that's been like a tax on our exports and a subsidy for our imports. That's why it's a little misleading to say that net exports are too noisy for us to worry about. As long as the dollar is near 12-year highs, trade is going to be a drag on the economy.
Winter isn't the economy's only weakness, but it might be the biggest one.
Indeed, the economy slowed to a near standstill with just 0.2 percent annualized growth in the first three months of the year, in no small part, because of the cold weather. Still, it takes a lot more than a few snowstorms to knock the economy off the 2.2 percent growth we had at the end of last year, let alone the 5 percent growth we had before that. So something else is also holding us back. The question is how much and for how long?
In other words, is this a blip or a bust?
[Read: U.S. economic growth slows to 0.2 percent, grinding nearly to a halt]
Let's start with the good news, though, since that won't take as long to talk about. The first part is that winter is over. Consumers should start leaving their homes to shop, and construction workers should start leaving theirs to build new ones now that you don't have to spend five minutes bundling up to go outside.
The second part is that the port strike is over, too. It should be easier to export things now that one of our major entrepôts isn't shut down.
And the last part, as Justin Wolfers points out, is that, for whatever reason, the seasonal adjustments the Bureau of Economic Analysis uses to calculate GDP seem to be out of whack for the first quarter. Indeed, since 2010, the economy has only grown an average of 0.6 percent in the first quarter and 2.9 percent thereafter. That's too big a difference to just be chance, which means that things probably aren't as bad as they look.
And besides, if you take a longer view, things don't even look that bad to begin with. They just don't look that good, either. GDP has actually grown 3 percent the past 12 months, and 2.9 percent if you strip out volatile inventory and trade numbers. This last one goes by the catchy name of final sales to domestic purchasers, and it should give us a better sense of the economy's underlying strength, since it only looks at the parts — government spending, consumer spending and private investment — of today's growth that we'd expect to continue tomorrow. And that, as you can see below, shows a recovery that isn't speeding up, but isn't really slowing down, either.
a massive rally that's been like a tax on our exports and a subsidy for our imports. That's why it's a little misleading to say that net exports are too noisy for us to worry about. As long as the dollar is near 12-year highs, trade is going to be a drag on the economy.
