Posted May 29, 2014 by Martin Armstrong
The first quarter numbers showed a contraction with first reading of gross domestic product (GDP) coming in at an annualized rate of just 0.1%. This steep decline has been due to weather. Our own office was closed way too often as we were forced to work from home. Once the snow cleared. hotels are full most of the time and trying to get dinner reservations these days at decent restaurants requires more than a week notice. That goes for NYC as well.
Nevertheless, the growth is low yet the US economy is not hurting yet. We are not in a real boom, we have assets shifting on a grand scale. The IRS is now considering taxing frequent flyer miles and any bonus points you get from hotels. Then there is the Obamacare Cadillac Tax coming that will tax all benefits from an employer.
I have pointed out that unemployment before the entire 1929 event stood at 5%. We are nearly 12%. Therefore, when this turns down, we will see much higher unemployment than anyone can imagine and this is likely in real terms exceed the 25% high of the Great Depression.
So the First Quarter number are expected. But keep in mind growth less than 2.5% is not worth writing about long-term anyway.