Three months ago the first government estimate of gross domestic product for the fourth quarter of 2004 came in at 3.1 percent at an annual rate. At the time, the market consensus expected 3.5 percent growth. Immediately, the mainstream media started talking about an economic slowdown. Turns out, that 3.1 percent was finally revised up to 3.8 percent … Well, history is repeating itself – even though, if you look under the GDP hood, you’ll find that the country’s economic engine is humming along … The core U.S. economy – subtracting out trade and government spending and keeping in consumer spending and business capital-goods investment – actually expanded at a 4.3 percent annual rate in the first quarter compared to a 4.8 percent pace in the fourth quarter and a 5.2 percent rate for the last year.
The core economy? Subtracting out net exports and government purchases? But why did Kudlow mention last year and not 2005QI – unless he read Kash’s post noticing that investment growth slowed in this latest quarter, which was Kash’s point. But I’m trying to figure out if Kudlow knows something we don’t, as he seems sure the revised GDP report will show a number greater than 3.1% and not less than 3.1%.