On Friday, the Commerce Department unveils the government’s first estimate of economic growth for this year’s first quarter. The consensus outlook calls for a hefty rise of 5.0%, according to Briefing.com. If that proves accurate, the optimists will no doubt celebrate the rebound from the dismal 1.7% rise logged for the fourth quarter. Indeed, 5.0% would be the fastest quarter growth since the 7.3% advance in 2003’s third quarter.
Meanwhile, the shadow from the previous number still looms. The fourth-quarter GDP report, you may recall, sent shivers throughout Wall Street and Main Street. The sky was finally falling, and recession loomed, or so it appeared from the sharp slowdown posted in the last three months of 2005 vs. the previous quarter.
Statistically, who could argue? The thin 1.7% advance in real GDP for the fourth quarter was a world below the 4.1% climb that prevailed during July through September. But as we wrote back in January, when the fourth-quarter number was initially released, there were more than a few skeptics claiming disbelief that the economy could be as weak as the Commerce Department said it was. A modicum of justification for the doubts came with each of the two subsequent 4Q GDP revisions. Once the numerical dust cleared, the 1.1% rise in GDP first reported migrated upward to the final 1.7%.
Still, 1.7% doesn’t suffice to keep the pessimists at bay. The task of regaining optimism’s commanding heights necessarily falls to the shoulders of this Friday’s 1Q GDP number. If the consensus holds, the coming weekend promises to be one when cries of “I told you so” echo throughout the land.