From the Chief Economist of a major financial firm

[stevenash]

" The 2.9% drop in real GDP during the first quarter was a fluke caused by a brutal winter and some one-off events.  With much of the monthly date in for the second quarter, it look llike the US will see that drop almost completely reversed.

 

Normally, we would expect a bigger bounce as pent-up demand (lost to weather) returned and added to growth already in train.  But, not this time.  In recent years, tax rates have been hiked, regulations have increased and government spending has expanded.  All of these are a burden on the economy that creates slower growth potential.

 

As a result, while we expect a nice rebound in second quarter GDP to 2.9% annualized growth, this still looks like a Plow Horse recovery.

 

This doesn't mean we won't see better growth rates in the years ahead.  Monetary policy is loose- and will stay that way even when the Federal Reserve starts raising rates- corporate profits have been terrific, and housing will continue to rebound.  Job creation has hastened, helping boost incomes and purchasing power.

 

However, the economy will remain disappointinly weak unless, and until, government policies change.  Given current policies, this economic expansion will not be like the ones in the 1980's or 1990's.  Not even close.