With the GDP revision today:
Broadly, economists expect the economy will strengthen later in the year, but it remains to be seen if growth can breakout of its about 2% pattern recorded for most of the economic expansion that began in mid-2009. Even a rebound to a 3% growth rate in the second quarter would still result in a sluggish expansion for the first half of the year.
The concept of “strengthen” is vague in the context. And there´s nothing to indicate that “growth will breakout of the close to 2% recorded pattern”.
The charts give a good visual.
In the first, I blocked out the (extended) Great Recession period. Note how nominal and real growth have come back at reduced speeds, which I named “Depressed” Moderation to contrast with the “Great” Moderation that took place from 1987 to 2007.
In the levels chart below, you can see how the economy has been “downgraded” to the “Depressed” Moderation. The important thing to note is that that´s exactly where the Fed wants it to be. If that´s true, there´s no chance the economy will brakeout of the “recorded pattern”.
Maybe that´s optimistic, because it appears the Fed has set its sights lower:
Federal Reserve officials forecast the economy to grow between 1.8% to 2.0% all this year, according to projections released earlier this month. That would represent a slowdown from the 2014 rate.
Note: The Fed knows what it wants!
Slow growth and inflation below target….