Despite experiencing a healthy pace of job growth, the US economy has largely disappointed economists’ expectations by delivering a series of weaker-than-expected economic reports.

The unexpected plunges in retail sales and durable goods orders stand out as they reflect weakness in both consumers and businesses.

On Wednesday, Bloomberg LP Chief Economist Michael McDonough tweeted a chart of the unprecedented divergence between job growth and retail sales growth. This is concerning as personal consumption accounts for roughly 70% of US GDP.

It’s particularly concerning considering all of the extra spending money Americans supposedly have thanks to falling gas prices.

“Recent US data have been disappointing,” Goldman Sachs Kris Dawsey said late Thursday. Dawsey thinks GDP growth could tumble to 1.4% in Q1 from 2.2% growth in Q4 of last year. Economists had previously expected GDP growth to accelerate in Q1 to around 3%.

Q2 Comeback?

For the most part, economists have attributed much of the recent weakness to unusually harsh winter weather and the plunge in oil prices, which has slammed the spending plans of US drillers. For this reason, economists are optimistic that weakness in Q1 could be offset by a rebound in Q2.

Dawsey specifically sees three reasons to be bullish on Q2:

  1. Consumers will bounce back: “While some of this output may be lost for good (i.e. people won’t eat two restaurant meals the next time they go out to make up for snow-delayed date night), a simple bounce-back to the prior level of spending would boost the growth rate in Q2 by roughly the same amount as the Q1 drag. In addition, some of the activity may just be shifted into Q2, in particular with regard to residential investment, resulting in an even bigger potential boost.”
  2. Energy companies will bounce back: “…the adjustment in oil-industry cap-ex has been more front-loaded than we expected, meaning that less adjustment will probably be needed in the remaining quarters of the year.”
  3. Gas savings will fuel spending: “…the consumer spending response to lower gasoline prices has been slower in coming than we would have anticipated. (Personal saving has increased by $123bn (annualized) since September, roughly the same magnitude as the $111bn decline in nominal spending on gasoline over this time.) Assuming at least some of the boost anticipated for Q1 shows up in Q2, it raises some upside risk to our standing 3% forecast.”

“Assuming at least some of the boost anticipated for Q1 shows up in Q2…” Dawsey said.

“Assuming” is the key word

Read more: http://finance.yahoo.com/news/something-weird-going-us-economy-133929266.html

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Evangelist Dina Amelia Kalmeta is the Founder and CEO of Your New Life in Christ Ministries - CWW7NEWS. Evangelist Dina reports on world events as they pertain to Bible Prophecy. Before Your New Life in Christ Ministries, Evangelist Dina served as a Leader for INCHRIST NETWORK leading teams online and spreading the Gospel of Jesus Christ. Her mission today is to bring hard evidence that what is taking place in the world isn't just coincidence, but indeed proof that the last days the Bible warned us about are upon us right now.