In Search of the True GDP
Seasonal factors and weather have confounded economists who favor the quarter-over-quarter growth methodology.
It was a quiet week for the markets as earnings season started to wind down and the economic news was mixed. World data this week was slim. The U.S. market was little changed, Europe and Japan were a little weaker, and emerging markets ended their winning ways, falling 2%. A softer dollar may have helped commodities along this week; they were the best performer, gaining 1.5%.
The dollar fell this week as U.S. GDP growth not only disappointed, but also was lower than growth reported in Europe for the first quarter. Emerging markets also fared poorly because of worries over U.S. growth rates, as the United States is a prime market for emerging-markets exports. Surprisingly, despite a weaker-looking U.S. economy, U.S. interest rates on the 10-year bond moved up from 1.92% last Friday to 2.12% this week. I suppose it didn't help that after this week's monthly Federal Open Market Committee meeting, the U.S. Federal Reserve remained noncommittal about when it would raise interest rates. It is clearly not giving out any hints or help whatsoever, which I suppose the bond market finds quite annoying.
Robert Johnson, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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