It pays sometimes to wait for the dust to clear: I was just looking at Q1 US GDP. Yes, things can change quite a bit between revisions, but the data is noteworthy as is.
Housing and utilities and healthcare (service component expenditure of personal consumption expenditure component of GDP) showed a “rather” large and coordinated rise:
I have heard the health care expenditure rise attributed to Obama Care expenditure and the utilities component is likely to be influenced by the weather. Nominal change in PCE was at its highest level since Q1 2012, so what if we adjust out the extremes of these two components expenditure?
What I have done is add the average household and utilities and health expenditure over the period Q1 2008 to Q1 2014 to PCE and then deducted the actual quarterly amounts. We see that without the extremes of the utilities and health that the PCE component is indeed very weak. More importantly it raises questions about the recovery in PCE in Q3 and Q4 of 2013. Especially when we consider that PCE as a % of GDP is elevated:
But there are other issues with the report as is:
The capital investment figure is a concern especially in the light of the trend post Q1 2012, which is that of volatile and ephemeral bursts in capex, but the fixed capital investment figure is awful throughout.
And of course, the export/import picture is weakening:
And I am not so sure that the inventory adjustment could not have been much worse:
Yes the negative adjustment to GDP was the largest since Q 2009, but inventory levels are at historically high levels and we are at greater risk of an inventory led recession if economic activity comes under further pressure.