Insights into the weak Q1 GDP data

By | May 6, 2015

Just like the old Lincoln commercials – this isn’t your father’s economic recovery. Growth has been weaker than normal. And longer than normal. And more manufacturing oriented than normal. Those aren’t all bad statements but another notable item during this recovery is highlighted in the accompanying graph. First quarter GDP growth has been substantially weaker throughout this recovery. That statement alone doesn’t tell us much but there are two basic theories as to why it is occurring.

First, the data could be correct and we are just experiencing some odd quirk where the first quarter just happens to be weaker each year. Weather could be a mitigating factor but it is unlikely that weather would be so persistent from year to year. Another basis for why this is occurring stems from the dramatic results of the Great Recession. The economic data got so skewed and the resulting behavioral changes that occurred because of the recession has lessened economists’ ability to adjust the numbers for ‘normal’ seasonal behavior. If ‘normal’ has changed then the economic data may not be fully reflecting that. That could help to explain why we haven’t seen the same persistent issue in the manufacturing data – it rebounded in a historically normal manner. It can also give us some comfort in seeing better growth during the rest of 2015 despite the concerns that we have stemming from the weak 0.2% growth for Q1 that was reported last week.

Economic reports that come out in May should give us a good clue as to whether the economy is sputtering or quickly rebounding back to ‘normal’.

GDP Graph

Originally posted on May 4, 2015 in the Trans4Cast report published by Truckstop.com. You can also listen to our podcast ‘FTR On the Go’ and listen to this post at any time.

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About Jonathan Starks

Jonathan has spent his entire career in the freight transportation sector having joined FTR in 2001. His expertise includes freight modeling, modal analysis, fleet characteristics, and equipment demand. He is directly responsible for producing FTR's more than 13 million datapoints and 85,000 forecasted dataseries each and every month.