The U.S. Bureau of Economic Analysis provided yet another revision to their first quarter numbers. In a third revision, we now learned that the economy declined by 2.9 percent, as measured by real gross domestic product (real GDP). That would rate as the second sharpest decline during the Obama administration and that worse decline was when we were in the midst of a steep financial crisis in the first quarter of 2009 when the economy contracted by 5.4 percent. Even though that is a depressing rate, many analysts still believe that it will be a temporary bump.
Here are the three reasons why we should not worry:
- Weather was particularly bad across the U.S., so we should see a healthy rebound during second quarter.
- Job growth remains healthy with June private sector job growth estimated at 281,000, which would be the highest since November 2012.
- U.S. manufacturing continues its healthy trend in 2014 with its latest reading at 55.3. (Note: Any number above 50 represents expansion)
Take a deep breath and take comfort that the U.S. economy should rebound strong in the 2nd quarter. Having said that, our economic recovery remains relatively soft with the International Monetary Fund downgrading U.S. economic growth prospects for 2014 from 2.8 percent to 2 percent.