The consensus in the media is that revisions higher in GDP to 0.9% means that the US has successfully avoided a recession.
I highly doubt that is the case.
The good news is that, and once again, I can comfortably slip into a (rather than mainstream) contrarian recession call. I was uncomfortable when the masses were ever so briefly agreeing with me anyway.
Why do I disagree? As the chart below shows, the revised GDP gains were 1) National Defense spending by Uncle Sam; 2) Inventory builds; and 3) net exports. That leaves the majority of the economy — call it "private domestic demand" — in contraction mode, with an annual rate of -0.4% (vs. -0.7% in advance GDP). Domestic Consumption, Fixed Investment, Exports, and State & Local governments all showed quarter over quarter losses.
Its important to understand the significance of this factor. In the post WW2 era, this is a relatively rare occurrence. Merrill’s David Rosenberg points out that "Over the past five decades, such weakness in private domestic demand occurred barely more than 10% of the time." You can bet those times were not brisk expansions.
charts by Jake
Plenty of folks seem to think we have wished our way out of a
recession. They need to spend some more time with the actual data.