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Thumbnail PM 041217Is The Market Getting Ahead of Itself?

I recently attended an event at which General George W. Casey spoke to a crowd of emerging business, civic, and non-profit leaders. General Casey served as U.S. Army Chief of Staff and was Commanding General of the Multi-National Force in Iraq from 2004 through 2007. He described his experiences in the Middle East, and his words offered some key truths for us all.

In his remarks, he referenced the “vuca” world in which we live: volatile, uncertain, complex, and ambiguous. He then stated how important relationships are to the success of any objective in such a world, in his case, peace in Iraq.

“People only see what they are prepared to see.”
     -Ralph Waldo Emerson

On Thursday, investors will get a first look at Q1 GDP that is unlikely to impress.  According to Bloomberg, economists expect Q1 economic growth of just 0.6%, and it’s possible we could even see a negative number.  However, the intelligent investor won’t overreact, especially given the recent issues in reporting Q1 GDP data.

JC Blog 4.28

We first wrote about the anomaly in Q1 GDP data back in July 2015.  Simply put, research from the Federal Reserve seems to indicate persistent errors in first quarter GDP reporting.  According to a study by CNBC that looked back to 1990, these errors average out to GDP revisions as large as 1.3%.  In other words, a 2.0% GDP figure could ultimately be revised to anywhere from 0.7% to 3.3%.  Even the Bureau of Economic Analysis, the government body in charge of GDP data, acknowledges issues.


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