WEBVTT X-TIMESTAMP-MAP=MPEGTS:900000,LOCAL:00:00:00.000 00:00:00.150 --> 00:00:05.430 It's really important to write down this GDP number because next week is going to look pretty uncomfortable particularly for the 00:00:05.640 --> 00:00:13.590 Federal Reserve. Negative GDP inflation surging. But you write down that GDP figure my can. It's less scary. Yeah the Fed is 00:00:13.590 --> 00:00:18.210 probably going to be OK with this. It's Joe Biden and the Democrats who have to worry because obviously this is going to 00:00:18.210 --> 00:00:24.090 be a Republican talking point. The economy grows six point nine percent in the fourth quarter and then shrinks one point four 00:00:24.090 --> 00:00:31.920 percent in the first quarter. But as you say break it down. Consumers OK a little bit lower than anticipated. That might get 00:00:31.920 --> 00:00:38.730 revised up but that added one point eight percent to GDP. Business spending. Look at that. Non-residential fixed income up 00:00:38.730 --> 00:00:45.960 nine point two percent. Another addition to GDP but inventories 34 billion less than they were in the fourth quarter. That 00:00:45.960 --> 00:00:54.900 subtracted eight tenths of a percent in trade. One hundred and ninety one point six billion dollars subtracted from GDP because 00:00:54.900 --> 00:01:02.340 of net exports and that subtracted three point two percent. Add that back in and you have a reasonable first quarter. So what's 00:01:02.340 --> 00:01:07.770 going on. Well all those ships that were off sea off the coast of California back in 00:01:08.850 --> 00:01:16.410 December and November finally landed in the first quarter. All that stuff gets counted as imports and subtracts from GDP. We 00:01:16.410 --> 00:01:23.310 also saw a lot of inventory build in the first quarter. Stocks are full now. So we see less inventory build. So the Fed isn't 00:01:23.310 --> 00:01:28.620 going to be as concerned because as long as consumers and businesses are still spending they'll still be hiring and the 00:01:28.620 --> 00:01:38.100 economy won't be as vulnerable to rate increases as you could think. Is this easy to explain politically. My humble street I 00:01:38.100 --> 00:01:44.255 understand the right down saw it from city from you and Shepherdson of Pantheon Macroeconomics basically predicted it. 00:01:44.550 --> 00:01:51.150 But when a consumer already feels the way it does maybe this GDP number is actually representative of how they feel. Yeah that's 00:01:51.150 --> 00:01:56.105 going to be the problem. It will be reflected in negative headlines because most people aren't going to read the stories. 00:01:56.100 --> 00:02:00.780 They'll just look at the headlines and they'll say yeah I knew things were bad. It's the same story with inflation. We got an 00:02:00.780 --> 00:02:09.359 inflation figure today that was pretty awful 8 percent for PCG for a quarterly number in the first quarter. Now we get tomorrow 00:02:09.389 --> 00:02:16.680 the PCC number for the month of March and we'll see if it was going up or going down. But in either case people are worried 00:02:16.680 --> 00:02:24.555 about inflation and that's hard for the Fed to explain why. If you can get jobs does the economy feel so bad.