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Expect The Unexpected, Predict The Unpredicted

April 6th, 2016

Atlanta Fed’s GDPNow model forecasts first-quarter GDP growth of 0.6%. The forecasts have gone from 2% then 1.4% and now this model projects next to no growth at all. Considering that this model begins projecting a quarters GDP about one month in. After the stock market last year there was not much excitement when the less than stellar early projections were released, and now this more accurate model is showing us this? Now considering that the GDP reports are annualized, that means our economy grew by only 0.15% in the first quarter.

The U.S. Economy created 215,000 jobs in February. Along with this wages increased by 0.3% and the unemployment rate held steady at 5%. The unemployment although not positive was in line with expectations. However, retail sales holds about 25% of those jobs created. Also small business created 64,000 more jobs than they took away last month, which is 30% of all jobs created.

 

Despite the increase in jobs created and the modest increase in wages, consumers are still in no rush to be spending any of their cash. There was a 0.1% Consumer spending increase in February as well as in January, the only problem is that this number was revised down from 0.5%. The modest gains of February were expected, however the revision of January’s numbers was not. This clouded the economic picture and instead of the consumers taking these new earnings to the market and store, they are saving, which is exactly what central bankers do not want.

Changing projected numbers downward is starting to look more like a habit than a simple mistake, which begs the question, how may other projections are going to be revised for the worse. To make sure your money is where you want it to be, contact David Ortiz your Registered Investment Advisor Representative today.