U.S Economy is Up…But is it Enough?

U.S Economy is Up…But is it Enough?
May 27, 2016 Market Traders Institute

 

The good news is that the U.S. economy grew more last quarter than the analysts predicted.

 

The bad news is that the GDP grew only 0.8 percent, and it makes the third consecutive year the markets have opened slowly.

 

“It’s still a very poor start to the year,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania.  However, Sweet did note that this is pretty common, and it doesn’t necessarily mean for a bad year. “From past experience we get most of that back in the second quarter,” he concluded.

 

These numbers revisions are pretty common after the quarters and it affects more than just the GDP.

 

There were also revisions to the wages and salaries numbers, showing the largest quarterly gains in almost two years ($125.5 billion, up from the previously reported $81.7 billion).; a raise in personal tax income adjusted for inflation (revised from 2.9 percent); the saving rate rose by almost 6 percent; and corporate profits rose 0.3 percent.

 

It’s no surprise that the initial numbers changed after review, it happens every quarter, but the direction the numbers changed is important.  The figures were all estimated lower than the reality, which means that, overall, the US economy is doing better than initially reported.  This is good news for the US as we are slowly getting closer to the Fed interest rate announcement which, as it stands right now, is probably going to rise.

 

It remains to be seen if the U.S. can keep these numbers (or add to them), but right now it’s so far so good for the world’s leading economy.

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