Economics

GDP Miss Due To Decrease In Government Spending [CHART]

GDP Miss Due To Decrease In Government Spending by Todd Sullivan, ValuePlays

The important point of this is that a we’ve been saying for a while the private economy continue to hum along at a 3%+ growth rate. It also means if this is just a calendar issue with gov’t expenditures, given that Q1 2014 GDP fell 1%, should those expenditures get pushed into Q1 along with normal spending, we could see a blowout GDP number in Q1 2015…

Finally, net exports caused a 1% decline in GDP. As actual numbers come in I’d expect this to be revised down and GDP revised up

“Davidson” submits:

US Real GDP for 4Q2014 was reported at rising 2.6%(this will be revised in future reports). By separating out Govt spending from the whole, you can see that Govt spending fell somewhat while the remainder continued to trend as it has since early 2009. This can be seen in the chart below.

GDP

Some have feared that falling oil prices are a result of a slowing US economy. Not so! Equity prices should respond to continued economic expansion by trending higher. Bond yields should rise(prices should fall) as investors eventually recognize that economic expansion continues.