Wider than expected trade gap contributes to drop in US 1Q 2016 growth now tracking at .9%. 'Shocker'...'surprising'...'Economists had been hopeful'...CNBC, March 28, 2016

3/28/16, "Shocker cuts to Q1 growth pace show faltering economy," CNBC, Patti Domm

"First-quarter growth is now tracking at just 0.9 percent, after new data showed surprising weakness in consumer spending and a wider-than-expected trade gap. 

According to the CNBC/Moody's Analytics rapid update, economists now see the sluggish growth pace based on already reported data, down from 1.4 percent last week. According to the rapid update, economists have a median forecast of 1.6 percent growth in first-quarter GDP, which includes their estimates for data not yet released....Fourth-quarter (2015) GDP growth was reported at 1.4 percent Friday, revised up from 1 percent. 

Economists had been hopeful the first quarter would show a snapback with growth above 2 percent, and some have been optimistic that weak manufacturing was beginning to show signs of bottoming....

The February trade gap widened by about a half-billion dollars to — $62.9 billion with both exports and imports higher than expected....

The closely watched Atlanta Federal Reserve's GDPNow forecast model Monday showed a steep drop to a 0.6 percent annualized pace from last week's forecast of 1.4 percent.

The median tracking forecast has fallen by about 1 percent in the past week, a surprising rate of change. But there is other data this week that could positively impact it, such as Friday's March jobs report."...

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Added: Average error rate of 1.3% in US gov. GDP numbers 1990 to present:

3/24/16, "CNBC analysis: Don't trust those GDP numbers," CNBC, Steve Liesman

"An in-depth analysis by CNBC of the government's reports on gross domestic product suggests large and persistent errors that should give investors, business executives and policymakers pause in relying on the data for key decisions. 

CNBC looked at each quarterly report going back to 1990 and found an average error rate of 1.3 percentage points. So an initial report of 2 percent growth on average later would be revised to 3.3 percent or 0.7 percent. 

The research does not show any systematic overstatement or understatement of growth, just persistently large revisions....

About 30 percent of the time, the government gets the direction of growth wrong....

Over time, as the economy has become more service-oriented, it's become harder to measure actual output, especially when the measures include complex ideas like intellectual property....

For example, the economy used to be far more reliant on manufacturing, and measuring the value of automobiles produced is far easier than measuring the value of the fast-growing health care and education service sectors of the economy.

But with trend growth only 2 percent, an error rate of 1.3 percentage points presents a danger for policy errors....

A study by the Organization for Economic Cooperation and Development found the U.S. about middle of the pack compared with other advanced countries on its error rates....

Interestingly, it has a pretty good handle on the biggest part of the economy, the consumer. The revisions to consumptions over time are relatively small, including revisions to services. The biggest error rates are in business investment including equipment and intellectual property. 

One irony is that the government data collectors have to go back and continuously revise the impact of government spending on GDP, which is to say, the government is not fully accurate in counting the government."



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