Did the Economy Bounce Back in April?
Did the economy bounce back in April? As discussed yesterday, the March GDP report was pretty weak at 0.02%. OK, so it was more than pretty weak: It was practically negative, right? So we might wonder whether, given the 2/10ths of a percent margin between 0 and 0.02%, we might be looking at an economy that, weak as it is, decides to just give in to fatigue and take a nap. In other words, will next month's GDP fall to zero or - heaven forbid - some negative number? We'll have to wait and see, since April GDP won't be published for several weeks.
The Fed and - you can bet on this - many if not most Wall Street economists have already or will soon predict a recovery from the threadbare GDP of March, most likely a strong uptick in April. We can only hope so. Then again, hope not being a a reasonable investment strategy, we can't just dismiss March's results as simply the results of a cold winter. Look at it these way: I don't know about you, but while some of my outdoor physical activity was curtailed by the cold here in the Northeast, I did not cease earning money; I did not cease buying the necessities of life; I did not cease making necessary decisions regarding my family's economic well-being, some of which involved making purchases of goods. So at least in my case, the cold really had virtually no impact on my spending. And GDP is essentially a number that reflects spending. Perhaps other Americans hibernated and stopped or seriously curtailed their spending. I couldn't say. On the other hand, you do know that it's possible to buy stuff via the Internet, didn't you? So what's the cold got to do with it?
In any case, a bounce in April wouldn't necessarily be beyond imagining. No one's going to argue that, right? But, alternately, is it so unreasonable to also imagine April being even weaker than March? If not, why not?
Look at it this way:
- In the case of government officials, they see and speak what the government wants them to see and speak.
- In the case of Fed officials, they see what their econometric models tell them. And these are by no means accurate mirrors of the real economy you and I see around us.
- In the case of economists, especially in the case of Wall Street economists, much of the data they peruse involves what has already happened, i.e., the past, as opposed to what's going on right now, never mind what might happen in the future. And in the case of Wall Street economists, they're pretty much required to always present a rosy picture. After all, they want people to invest in Wall Street's products; and they know people tend not to invest when things look grim.
So by cranking up your brain and looking around you're likely more in touch with what's going on right now. What do you see? Is it an expanding dynamic economy offering jobs to your neighbors so they can save, invest, and economically advance?
The Fed and - you can bet on this - many if not most Wall Street economists have already or will soon predict a recovery from the threadbare GDP of March, most likely a strong uptick in April. We can only hope so. Then again, hope not being a a reasonable investment strategy, we can't just dismiss March's results as simply the results of a cold winter. Look at it these way: I don't know about you, but while some of my outdoor physical activity was curtailed by the cold here in the Northeast, I did not cease earning money; I did not cease buying the necessities of life; I did not cease making necessary decisions regarding my family's economic well-being, some of which involved making purchases of goods. So at least in my case, the cold really had virtually no impact on my spending. And GDP is essentially a number that reflects spending. Perhaps other Americans hibernated and stopped or seriously curtailed their spending. I couldn't say. On the other hand, you do know that it's possible to buy stuff via the Internet, didn't you? So what's the cold got to do with it?
In any case, a bounce in April wouldn't necessarily be beyond imagining. No one's going to argue that, right? But, alternately, is it so unreasonable to also imagine April being even weaker than March? If not, why not?
Look at it this way:
- Are you making more money now than you were last year?
- Do you foresee making more money next year than you're making this year?
- Are your college graduate children gainfully employed at jobs that allow them to leave home and live independently?
- How would you imagine your neighbors might answer these questions?
- In the case of government officials, they see and speak what the government wants them to see and speak.
- In the case of Fed officials, they see what their econometric models tell them. And these are by no means accurate mirrors of the real economy you and I see around us.
- In the case of economists, especially in the case of Wall Street economists, much of the data they peruse involves what has already happened, i.e., the past, as opposed to what's going on right now, never mind what might happen in the future. And in the case of Wall Street economists, they're pretty much required to always present a rosy picture. After all, they want people to invest in Wall Street's products; and they know people tend not to invest when things look grim.
So by cranking up your brain and looking around you're likely more in touch with what's going on right now. What do you see? Is it an expanding dynamic economy offering jobs to your neighbors so they can save, invest, and economically advance?
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