Thursday, May 29, 2014

The Economy - GDP

GDP was revised for the first quarter of 2014 to a negative 1%. This in itself is not that bad. Yes it's not great, but things could be much worse. The issue is though, what will the GDP number be next quarter? A negative 1st quarter number is not bad because we always experience a slowdown in the 1st quarter. It happens naturally as a response to the increase in demand in the 4th quarter. We always have an increase in demand going into Christmas and then a slowdown in January, February, and March. So what is the 2nd quarter going to be like? Many are saying that there will be pent up demand and things will grow again in the 2nd quarter. I don't think that will happen. I think we are headed for another recession. I can see it when I go shopping. There have been fewer shoppers in the stores these last few weeks. Maybe that's just for my area, but my area is fairly typical. I think we are heading into a recession and we are not prepared for one. There is no surplus. There is no reserve. There is nothing in the savings account. There is not "fat" to draw from. If we are headed into a recession, things could get ugly because of the poor shape we are in. This might be the start of the storm I keep warning about.

What do you think?