● The Power of a Single Number: A Political History of GDP
By Philipp Lepenies
Summary via publisher (Columbia University Press)
Widely used since the mid-twentieth century, GDP (gross domestic product) has become the world’s most powerful statistical indicator of national development and progress. Practically all governments adhere to the idea that GDP growth is a primary economic target, and while criticism of this measure has grown, neither its champions nor its detractors deny its central importance in our political culture. In The Power of a Single Number, Philipp Lepenies recounts the lively history of GDP’s political acceptance—and eventual dominance. Locating the origins of GDP measurements in Renaissance England, Lepenies explores the social and political factors that originally hindered its use.
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It’s all about jobs now. Actually, it’s always been about jobs. But the stakes are even higher—perhaps more so than at any time since the Great Recession ended–in the wake of yesterday’s weak GDP report for the first quarter.
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● US Economy Expands 0.5% in Q1, Weakest in 2 Years | Bloomberg
● US Jobless Claims Rise but Remain Historically Low | WSJ
● Consumer confidence rebounded last week in US | Bloomberg
● KC Fed Mfg index still in red, but marks 2 mos of improvements | 24/7 Wall St
● Eurozone Q1 GDP +0.6%–much more than expected | Eurostat
● Obama Weighs His Economic Legacy | NY Times
● Is OPEC Preparing for End of the Oil Era? | Nation

US economic growth stumbled in this year’s first quarter, according to this morning’s estimate from the Bureau of Economic Analysis (BEA). The government’s first release of the Q1 GDP report revealed a weak gain of 0.5% (seasonally adjusted annual rate)–less than half the pace of the already sluggish 1.4% rise in last year’s Q4. A key factor behind the economy’s slowest quarterly advance in two years: softer consumer spending.
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The Federal Reserve left interest rates unchanged yesterday, as widely expected. But the possibility of a hike in June is lurking… maybe. “This latest [FOMC] statement has not laid out a strong position for a June rate hike,” Bill Irving, a Fidelity portfolio manager, tells Reuters. Meanwhile, the Treasury market is sending mixed signals. On the one hand, yields ticked lower, perhaps in anticipation of a weak first-quarter GDP report that’s due later today. But then there’s the sight of the Treasury market’s inflation expectations rising to the highest levels since last summer. It all adds up to a strange brew of market signals.
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● Fed signals no rush to hike rates as economy hits soft patch | Reuters
● Forget June. The Fed isn’t likely to hike until Dec | CNBC
● US Pending home sales +1.4% to 10-mo high in Mar | MarketWatch
● US mortgage applications fell 4.1% last week | HousingWire
● Bank of Japan shocks markets by voting against more stimulus | Guardian
● Be Afraid, Be Very Afraid If Investing for the Long Run | Bloomberg
● Is Gold More Productive Than Cash? | Merk Investments

The Federal Reserve is widely expected to leave interest rates unchanged today. But perhaps standing pat with the target Fed funds rate at a mildly positive 0.25%-0.50% range should be viewed as a minor victory in the global context of monetary policy these days. Holding rates steady at just slightly above zero may seem like the poster child for dovish policy in the grand scheme of central banking history. But there’s a hawkish aura to Fed policy relative to the negative rates that are creeping into the global economy in other corners.
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● Orders for US Durable Goods Rose Less Than Forecast in Mar | Bloomberg
● US Consumer Confidence Index slips in Apr | MarketWatch
● PMI: US service sector growth remains subdued in Apr | Markit
● Richmond Fed mfg survey: activity continued to expand in Apr | Richmond Fed
● US home prices in 20 cities rose in Feb | CNBC
● UK GDP growth slows to 0.4% in Q1 | Guardian
● Trump and Clinton edge closer to nominations | NY Times

What a difference a month makes for anticipating Thursday’s “advance” GDP report for the first quarter. In late-March economists were projecting US growth at 1.5%-plus, perhaps even in the low-2% range by some accounts (seasonally adjusted annual rate). But expectations have fallen on hard times in recent weeks and the government’s preliminary estimate of economic output in Q1 has been cut to as low as 0.1% by one firm’s reckoning. Econoday.com’s consensus forecast of 0.7% is firmer, but this estimate still represents a sharp deceleration from the already sluggish 1.4% pace in last year’s Q4.
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● US New-home sales slip in March, after prior months revised up | MarketWatch
● Dallas Fed mfg index falls more than forecast in Apr | Business Insider
● Fed to Keep Options Open for June Rate Hike | Bloomberg
● Nearly Two-Thirds of Americans Prefer Saving to Spending | Gallup
● The Fed’s Inflation Fail | Narayana Kocherlakota (Bloomberg)