Economy actually *contracted* 1% in 1Q 2014.

Well, this isn’t good.

Last month, when the Bureau of Economic Analysis announced that gross domestic product had grown at a lead-footed rate of 0.1 percent in the first quarter, economic analysts could focus on two pillars of hope. The first was that the winter weather was unusually awful, and first-quarter growth probably reflected that. And the second? This was a very preliminary number, and it seemed reasonable to think that it might be revised upward.

The operative word is “seemed.” Now the BEA has provided its first revision, and things only get more dismal: The economy actuallycontracted in the first quarter instead of just lying down on the sofa and feeling all mopey and sad. Key areas of decline were exports, inventories and nonresidential fixed investment. In other words, whatever happened was happening on the business side.

Megan McArdle is not yet ready to say that we’ve hit the iceberg, and that’s fair: after all, it’s not OFFICIALLY a recession until the economy contracts two quarters in a row.  Then again, even if the economy does contract two quarters in a row it still may be a while before we ‘officially’ call it a recession, if you know what I mean (and I think that you do). One of Megan’s points here, though, is that the situation is sufficiently bad that the economy just doesn’t have any margin any more.  Essentially, we’ve been drifting into iceberg-infest waters for some time now.  Will one hit? Will we miss them all?  I don’t know! Neither do you!  And certainly, neither does the President!


Moe Lane

PS: This is one reason why we like to have people with actual executive experience run for President. A governor may or may not know how to fix a problem – see pretty much every Democratic governor in America for examples – but at least he or she understands the parameters of it.  In contrast, Barack Obama is still peevishly waiting for the person to come in and tell him what he has to do while the real experts fix things.  At least, that’s how it’s always worked in the past.


  • BigGator5 says:

    Recovery! *thumbs up*

  • Skip says:

    I commented at the time that the number at the end of april was obviously fudged to make it positive, and to expect an ‘unexpected’ drop in the coming months – 30 days later, right on schedule we get one. Except I was expecting one revision now, of maybe half the total revision downwards, and another in a month or so.

    Of course, that still may be what happens.

  • Luke says:

    Looking forward to another Recovery Summer!
    There are green shoots.
    But only in my garden.
    And most of *them* are weeds.

    • tomiathon says:

      come on now, you need to move the 1st word of the 2nd and third lines to the end of the previous lines for proper Recovery Haiku

  • tomiathon says:

    If I had to guess I would imagine it won’t be called a recession until, oh, November 5th, thereabouts. IYKWIMAITYD.

  • Freddie Sykes says:

    If it happens, the media will avoid the R-word but this is an election year. It might be bandied about in Sept and Oct in campaign ads and by Republican talking heads. The R-word will get out and then the Democrats will have the choice of ignoring it or refuting it using other definitions. .

    • Luke says:

      Or demonizing Republicans for “talking down the economy”.
      Because noting reality is almost the same thing as creating it.

  • garfieldjl says:

    Anyone else not surprised by this… The economy has been flatlining for a while, and all the attempts the media makes to play it up, it doesn’t change the fact that Obama’s policies are extremely destructive to the economy.

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