LaCostaRacer

We touched on this topic in the 'Is the Dow going to crash thread' but I think this idea might deserve its own thread.

I personally believe we're already in a recession but it's not 'official' yet. The FED sees no signs of a recession; however, they are wrong more than right so I don't take much comfort in their assessments anymore. Interest rates have increased and the Fed hints of more hikes in the future. 2016 will have head winds that 2015 did not have ,so it seems plausible that growth may slow down with increased rates.

We'll see what the revised Q4 2015 GDP report says on 2/26/16. GDP was originally estimated at 0.7% last month. GDP may not be revised less than 0, but will likely be less than the original 0.7%. There's not a lot of padding between 0.7 and 0 so if it's not this quarter it will likely be next quarter for the first negative GDP quarter.

It takes two back-to-back quarters with negative GDP to define an recession.

Dan

LaCostaRacer

Q4 2015 US GDP original estimate: 0.7%, 2/25/16 first revision UP to 1.0%. This is no doubt a green shoot in a blossoming economy where a quarters GDP fluctuates from .7 to 3.9% depending on quarter and revision of GDP report.

The sky appears not to be falling! This GDP report will definitely cause the Fed to think things are great and to raise interest rates in March.

We can also definitely ignore those leading indicators of economic growth: New Housing and Service Sector reports- those are just 'acorns' in the scope of the big picture.

nfnsquared

LaCostaRacer

All it takes is two consecutive quarters to define a recession. The final 2016 Q1 GDP number is still being calculated and all we have are estimates.

The Atlanta Fed has a .0.3% GDP estimate upwardly revised this week from 0.1%. The upward revision occurred even after bad numbers related to retail sales, inventories, industrial production, and factory capacities came out. The other kicker for Q1 is that there was no 'bad winter' weather excuse this year. If Atlanta fed is correct 2016Q1 GDP will be 0.3% when the so-called bad winter 2015Q1 GDP was 0.6%.

If the economy is so rosy and not slowing down, how do you explain what's going on? It's really telling when you look at 2015 GDP:

Q1: 0.6
Q2: 3.9 (carry over from q1 bad weather?)
Q3: 2.0
Q4: 0.7

It looks like a gradual fade if you average Q1/Q2 together for the weather as being 2.3% and then a major drop in Q4.

Note the official Wall Street Journal estimate for 2016 Q1 is: 1.1%. Also note that the estimates are generally higher than actual since 2012: 9 out of 16 quarters have been over-estimated. The estimates are inaccurate too with 10 out of 16 quarters off by more than 1%. It is very possible 2016 Q1 comes in negative.

Gas is cheaper this year than last year so consumers should have a little more money, but yet the numbers look to be going down. Something is up with the economic numbers and the rise of both Trump and Sanders Presidential candidates who promise change. People are not that stupid to think that things are better today than 8 years ago.

LaCostaRacer

0.5% 2016 Q1 GDP (preliminary)

That's a pretty lame GDP number if you compare to 2015 that had the harsh winter- pretty warm this year! I would not expect any boost in Q2 like what happened in 2015. It's still very possible that the Q1 GDP will be negative when the revised report becomes available- the economic indicators of last couple weeks have mostly been negative: durable goods, corporate revenues/earnings, and core capital goods. Oil is now increasing so that will subtract any benefits for Q2.