A “Boxer” Economy


Photo: Karl-Heinz Stargardt. Source: Pixabay

Last quarter’s GDP report was confusing. Compared with a year ago, the economy grew 3%. Compared with the previous quarter, it barely grew at all. Is the economy growing or not?

A raft of reports have come out that show some softening in the economy: factory output is slowing; last month’s jobs data ware lackluster, business confidence is down. And quarterly GDP was flat, and will probably be revised down. But other statistics are positive: personal income is up, spending has increased, and services seem to be expanding. What’s going on?

There were a host of issues last quarter that impacted the economy. The weather was lousy. New England and parts of the Northeast saw record snowfall. There was also a longshoreman strike in ports along the West Coast—clogging the pipeline of products that flow to and from Asia. A lot of California oranges sat rotting in their containers.

Also, something seems to be affecting the seasonal adjustment process at the Bureau of Economic Analysis. Winter’s GDP number has been negative or almost negative four out of the last five years, even though we know from other indicators that the economy has been expanding at a reasonable pace all this time.

Source: BEA

So I’m inclined to compare one period’s data to data from a year before. Last year we had a bad winter too, but it didn’t knock the economy off the skids. Still, there’s enough in the latest set of reports to keep both bulls and bears happy. Economic statistics can be like the Simon and Garfunkel song, “The Boxer”: you see what you want to see, and disregard the rest.


Douglas R. Tengdin, CFA
Chief Investment Officer
Phone: 603-224-1350
Leave a comment if you have any questions—I read them all!

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