It looks like Federal government spending kept the nation out of recession in the first quarter of 2014 — but only just.
According to the Department of Commerce, the gross domestic product grew 0.1%, just above the threshold to be considered recession, if coupled with a rise in jobless claims.
But, luckily, it seems the worst of it may be over.
Case in point: Jobs numbers today came in strong.
"The 220,000 U.S. private sector jobs added in April is well above the twelve-month average,” said Carlos Rodriguez, president and chief executive officer of ADP.
“Job growth appears to be trending up and hopefully this will continue,” Mark Zandi, chief economist of Moody’s Analytics, said.
He continued, "The job market is gaining strength. After a tough winter employers are expanding payrolls across nearly all industries and company sizes. The recent pickup in job growth at mid-sized companies may signal better business confidence. Job market prospects are steadily improving.”
So how did we narrowly avoid recession during that tough winter?
Real federal government consumption expenditures and gross investment increased 0.7% in the first quarter, in contrast to a decrease of 12.8% in the fourth.
In short, the government spent its way out of recession.
National defense decreased 2.4%, compared with a decrease of 14.4%. Nondefense increased 5.9%, in contrast to a decrease of 10%.
The increases are significant and not exemplary of the economic austerity expected with the looming budget crisis expected by some.
But, then again, "recession" is such a negative headline, isn't it?
We can forgive the administration for spending a little, but remaining austere most of the time.
So, to be sure, this happened only at a nation level.
Real state and local government consumption expenditures and gross investment decreased 1.3%; it was unchanged in the fourth quarter.
The good news is not much of this is impacting the mortgage finance markets overall. So, for better or for worse, things in our industry will not shift dramatically in this quarter.