Thursday, May 31, 2007
Let's not push the panic button just yet
GDP rose at a seasonally adjusted 0.6 percent annual rate in the first four months of this year, the Commerce Department said today. It was the weakest performance since 2002.
Originally, the government had estimated first-quarter 2007 GDP rose 1.3 percent.
The Wall Street Journal's Justin Lahart says we have nothing to fear -- yet (subscription required). To wit:
"U.S. export growth stalled in the first quarter - an unexpected, and most likely temporary occurrence, given the strength of overseas economies. A rebound in outbound shipping from West Coast ports in April suggests export growth is picking up already.
"More important, reduced inventory levels mean companies can start ramping up production to fill their shelves.
"Demand appears to have been much weaker than most companies expected in last year's second half, and as a result unsold goods piled up in warehouses and in stores. In the first quarter, they throttled back on production to work those inventories down. That cut a full percentage point out of GDP growth, USB economists estimate. With inventories lean, many companies now appear to be ramping up production.
"They might have second thoughts if consumer spending weakens. But for now, investors can take heart. The speed of inventory adjustment is a testament to the economy's resilience."
Originally, the government had estimated first-quarter 2007 GDP rose 1.3 percent.
The Wall Street Journal's Justin Lahart says we have nothing to fear -- yet (subscription required). To wit:
"U.S. export growth stalled in the first quarter - an unexpected, and most likely temporary occurrence, given the strength of overseas economies. A rebound in outbound shipping from West Coast ports in April suggests export growth is picking up already.
"More important, reduced inventory levels mean companies can start ramping up production to fill their shelves.
"Demand appears to have been much weaker than most companies expected in last year's second half, and as a result unsold goods piled up in warehouses and in stores. In the first quarter, they throttled back on production to work those inventories down. That cut a full percentage point out of GDP growth, USB economists estimate. With inventories lean, many companies now appear to be ramping up production.
"They might have second thoughts if consumer spending weakens. But for now, investors can take heart. The speed of inventory adjustment is a testament to the economy's resilience."
# posted by Joltin' Django @ Thursday, May 31, 2007 
