The Globe and Mail reports in its Saturday edition that the U.S. Commerce Department's preliminary reading of first quarter gross domestic product, released on Friday, may contain an early warning signal of an impending slowdown.
The Globe's David Parkinson writes that the Commerce Department estimated quarter-over-quarter growth at a 3.2-per-cent annualized rate -- far better than the 2 per cent most economists had expected. After a bit of a lull in the fourth quarter of 2018, when growth clocked in at a relatively modest 2.2 per cent, the U.S. economy looks to be back on its 3-per-cent-plus track. Still, there are good reasons to be suspect. For one thing, it is just the first of three readings of quarterly GDP the Commerce Department will publish -- and the first reading is notoriously inaccurate. Historically, the average revision between the first GDP growth estimate and the third is 0.6 percentage point in either direction. When you see a first estimate that is much higher than economists have calculated based on other data for the quarter, it looks ripe for a downward revision.
However, even if we take the GDP estimate at face value, this might be about the weakest 3.2 per cent we will ever see.
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