Adjustable Government Data
At the beginning of every quarter Wall Street places its overly optimistic GDP forecasts on parade. And by the end of the quarter, those same carnival barkers line up a myriad of excuses as to why the numbers fell short. Port strikes, a stronger dollar and snowier winters (caused by global warming?) are among their current favorites.
But the anemic data in the first quarter of 2015, followed by the not so much better data in the first month and a half of Q2, has rattled the optimism of not only the usual Wall Street cheerleaders, but even many at the Federal Reserve.
Historically, when the Fed saw no growth on the horizon, they would doctor up a monetary tonic in an attempt to soothe the economic malaise. But since interest rates are already at zero percent, it has left Fed officials desperate for another scheme to dig the economy out of the economic mud. So they have now found temporary relief in a simple phrase: It’s a phenomenon economists are calling “Residual Seasonality.”
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