Friday, April 27, 2012


The Lehmann Letter (SM)

Today's GDP number was OK. The Commerce Department reported that gross domestic product grew by 2.2% in the first quarter:

That's not bad. We had smaller numbers for several quarters in 2011, as the chart indicates.

There were, however, some components of interest. Household expenditures on durable goods, such as motor vehicles, grew strongly. That's not surprising since new-vehicle sales have been robust in recent months. Residential construction's vigorous performance was of greater interest because the housing numbers have not been especially encouraging. Perhaps the first quarter's good winter weather permitted an unseasonably large amount of construction activity. Housing starts did pop up a bit in January and February and builders may have done an unusually large amount of work on structures in progress.

There were also some disappointing negative numbers. Business investment in plant and equipment fell after showing recent strength. Sadly, too, both federal and state and local government spending continued to slide. It's too bad that we've chosen to curtail government expenditures while the private sector continues to struggle.

GDP Change
(Click on chart to enlarge)
(Recessions shaded)

But all in all and all things considered, this has not been a bad quarter.

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© 2012 Michael B. Lehmann

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