Matthew C Klein, Columnist

What That GDP Revise Really Means

On the one hand, the economy is somewhat weaker than people had previously hoped. On the other, that persistent weakness will probably make the Federal Reserve reluctant to "taper" its asset purchases prematurely.

June 26, 2013 at 7:55 PM UTC

By Matthew C Klein

Matthew C. Klein writes for Bloomberg View about the economy and financial markets. He previously wrote for the Economist magazine and its economics blog, Free Exchange. Before that, Klein was a research associate at the Council on Foreign Relations, where he spent more than two years studying the history of the Federal Reserve and the intellectual history of monetary economics for an upcoming book by Sebastian Mallaby. He also worked at Bridgewater Associates, where he studied the economies of Central and Eastern Europe and advised institutional investors on asset-liability management. Klein has a bachelor's degree in history from Yale University. Originally from Chicago, he lives in New York.

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U.S. stocks were up this morning despite some surprising and sizable downward revisions in the U.S. Bureau of Economic Analysis's final first-quarter estimate of gross domestic product. Most bond yields, which have risen relentlessly since May, are down by a few basis points as well.

The new information is about stuff that happened months ago, so it makes some sense that the markets have been relatively sanguine. On the one hand, the economy is somewhat weaker than people had previously hoped. On the other, that persistent weakness will probably make the Federal Reserve reluctant to "taper" its asset purchases prematurely -- much less raise short-term interest rates.