Brown Shoot: Rapidly falling imports artifically inflated the Q1 GDP
We all know that the Commerce Department published the first quarter GDP earlier this week and that the 6.1% contraction was worse than economists were expecting.
What you won't read in the headlines is without the rapid drop in imports resulting from a drop in U.S. consumption, which obviously is a bad thing for the global economy, the GDP would have actually been much worse (kudos to The Big Picture to bringing this to my attention).
You see, imports are subtracted from the U.S. GDP number when it is calculated. The drop in foreign imports to the United States actually boosted the Q1 GDP by 6.05%. Without this adjustment, the GDP in Q1 would have been a stunning -12.15%. Ouch. Forget about green shoots, this is one huge brown shoot if you ask me.
Had that been the headline number, I doubt that Mr. Market would have been nearly as cheery lately as he has. I am playing things very cautiously right now. Other than purchasing a small starter position in the common stock of an unnamed large cap dividend paying company the other day, I have not committed any nw money to the stock market since this rally began. I think that we will see another "buying opportunity" before things are all said and done.