Bad news everyone – all that government spending didn’t keep the economy from contracting in the first quarter after all.
The nation’s domestic economic output for the first quarter was revised downward Thursday, posting a contraction of -1.0% from a meager positive 0.1% initially reported.
This was the first gross domestic product contraction since the first quarter of 2011, the Bureau of Economic Analysis reported.
And just last month everyone was popping corks over the initial 0.1% figure. (Sorry Jacob.)
If one needs further proof how bad this is and how the second quarter won’t be able to make up the slack of the first, consider that Joseph Lavorgna, chief U.S.
cargo cultist economist at Deutsche Bank, told CNN Money that he predicts the economy will rev up and grow at more than a 4% pace in April through June.
He also said that the contraction in the first quarter GDP was entirely expected -- although neither Lavorgna nor any of his peers forecast it -- and that investors shouldn't worry.
Whatever Lavorgna predicts, bet on the opposite happening.
Pictured: Probably not Joseph Lavorgna.
A slump was entirely expected, and economists aren't too worried. They forecast a bounce back in the spring.
(Note to CNN: Check your calendar.)
New Redfin chief economist Nela Richardson said she believes the economy has lost ground, particularly in housing, and that there’s nothing in the data she sees now to indicate the second quarter will be much better, or at least enough to make up for the first quarter.
The decrease in real GDP in the first quarter included declines in residential fixed investment spending. The balance was negative contributions from private inventory investment, exports, nonresidential fixed investment, and state and local government spending.
Worse still and more specific to housing, pending home sales for the month of April plummeted 9.2% compared to April 2013, the National Association of Realtors reported Thursday.
While there are signs the second quarter will improve from the first quarter contraction in terms of both the economy overall and housing in particular, it’s not going to be close to the 4% the financial spin doctors and witch doctors are talking about.
This stagnation in the first quarter is part of the continuing cycle we’ve seen since the start of the “recovery” in mid-2009 – growth by inches and long plateaus.
We've had the worst four years in the history of GDP growth, no matter how hard the sell-side and sunnysiders try to say otherwise.
There’s nothing right now to suggest that anything will be breaking that continued, tepid cycle, and a lot to suggest the economy is weakening, not strengthening.