On the Road with ITR Economics

  • by itradmin - Mon, 05/01/2017 - 08:53

The preliminary estimate for GDP growth in the first quarter of 2017 is a lackluster 1.7% annualized growth rate. The relatively poor showing is inconsistent with the strong business-to-business activity we are hearing about throughout our travels in the first four months of 2017. However, the GDP number is consistent with the quarter's poor performance of General Merchandise Retail Sales. Online activity is hurting the general merchandise stores (Sears, Walmart, JCPenny, for example), and this is a big line item in the general scheme of things.

The good news is that there are positive leading indicator trends for future retail sales in 2017 and we think a pick up in activity in the second quarter and beyond is probable. This suggests that an improvement in the GDP rate of growth will occur. Helping this assessment is the positive financial shape of the consumer; consumers have the money to spend and spending comes very naturally to most of us. Combine our innate desire to spend and the ongoing recovery in business-to-business activity and you have the underpinnings of accelerating economic growth in the quarters ahead.

Brian Beaulieu