Yes, the U.S. Economy Probably Contracted in the First Quarter. But How Much?

22-May (Wall Street Journal) — The U.S. economy’s performance in the first quarter of the year is looking worse and worse.

Last month, the Commerce Department reported gross domestic product, the broadest measure of economic output, grew at a 0.2% seasonally adjusted annual rate in the opening months of the year.

That estimate was based on incomplete data. Since, figures on trade and inventories have come in lower than expected, suggesting the economy actually contracted. (Higher-than-expected imports and lower-than-expected inventories are the big drags.)

On Friday, after Commerce released wholesale inventory data for March, J.P. Morgan Chase cut its tracking estimate of first-quarter GDP growth to minus 0.8% from minus 0.5%. Barclays lowered its estimate by three-tenths of a percentage point to minus 0.6%. Forecasting firm Macroeconomic Advisers knocked two-tenths of a percentage point off of its first-quarter estimate, taking it to minus 0.6%.

[source]

PG View: Well, as long as the economy continues to improve (see Yellen comments today), the Fed is on track for a rate hike this year. . . Not.