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| Why All the Hype Over Today's Pending GDP Release? - Apr. 28, 2006 |
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Summary
Not long from now (0830 ET), the Commerce Department will release its initial estimate of first-quarter 2006 gross domestic product. This will have been the most hyped GDP release in many, many moons. Here are a few thoughts about all the hype.
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The consensus estimate for real GDP growth during the March quarter is around 5%. There have been people talking about an even higher number, something approaching 6%. Today's report has been talked about and emphasized for months, making it one of the more hyped GDP releases I can remember in a long time. "Why," you ask? Because the fourth-quarter 2005 result, even after two revisions was, shall we say, "lackluster."
Commerce originally reported a fourth-quarter growth rate of 1.1%. This was revised to 1.6% at the end of February, then to 1.7% at the end of March. Nevertheless, the highest of the three numbers was far too weak to give bulls what they needed, primarily to promote higher stock prices. In turn, this led to the huge hype operation regarding the large improvement expected during the first quarter and to be reported shortly. No one has been more vociferous in this endeavor than one Larry Kudlow, joined by such economic luminaries as Rush Limbaugh and Sean Hannity.
Actually, I believe the Commerce Department's portrayal of the economy's behavior during last year's fourth quarter was quite sensible in several areas. So much so, in fact, that I may want to come back to it after today's release is out. In the meantime, readers might want to have another look at my missive dated 2/2, which was entitled, "Bravo, Commerce Department, for a Sensible GDP Report!"
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