Don't Believe the Hype on GDP

The predictable round of surprised economists and television commentators are going to be all over the place tomorrow when the GDP report turns out to be better than expected. Or maybe not.

Sure, the trade deficit narrowed, and that's going to goose the second-quarter figures some, but saying that's economic strength is like playing with Monopoly money. The real story is that the collapse in business spending is going to completely obliterate tomorrow's figure, and so the 0.9% consensus may end up being the right one. ...