The old adage that ‘the market must climb a wall of worry’ – i.e., that the best bull runs take place to the accompaniment of a swelling chorus of doubters – seems to have taken on a broader application in the economy at large where everything and anything which can be negatively construed currently calls forth a howl of rancorous ‘I told you so’s’ from the Herd.

The first major quibble was that the so-called ‘soft’ data – which largely take the form of various opinion surveys – were running away from the ‘hard’ – principally those compiled by the official number-crunching agencies – and, hence, were not representative of the true state of affairs.

Now the cry goes up that the ‘soft’ is again – in that most ugly of present usages – ‘catching down’ to the ‘hard’: a move toward greater consonance in which the downward tilt of what we have just been energetically derided as being the more insubstantial of the two sets of indicators is implicitly now seen to carry greater significance than the less dramatic course being simultaneously mapped out by its supposedly more reliable alternative.

Given that many of even the more reputable and informative of the former – such as the Institute of Purchasing Manager’s long-standing business index – are a compilation of binary responses to the qualitative question, ‘are things getting better or not?’, the inevitable mean reversion after any surge of improvement – real or imaginary – does not, in fact, signal an incipient commercial retrogression, but merely a less widespread sense that cash registers are ringing more rapidly, order books are filling with greater ease, and warehouse shelves are emptying any more quickly than they already have been doing of late.

Thus, a ‘catch-down’ is nigh on inevitable, especially given the greater immediacy of the survey responses when compared with the slower pace of bureaucratic form-filling on the part of the government statistical offices.

Beyond this, of course, should some smattering of the ‘hard’ data start to undershoot the Pavlovian expectations of the macromancers – as some are indeed currently doing, if well within the error bars associated with them – not only are such gyrations given great play in the media, but the fact that the commentariat’s straight-edged extrapolations from precedent have (again) been disabused only compounds the horror by swivelling the so-called ‘surprise index’ of their combined guestimates – surely the ‘softest’ and most inherently self-correcting of all numbers – in to the red, too!

As if to cap it all, when published at the end of last week, the BEA’s advance estimate of real GDP for the first quarter came in with a dull thump, printing an annualized 0.7% which was its most tardy increase in three years.

You see? The Ghost of ’37 has come to haunt us again! The Fed’s modest tightening has severely weakened an economy now unlikely to be boosted by those extravagant promises of radical reform made by the flailing Trump administration! Break out the sackcloth and ashes and get yourself ready for a nostalgic tour of the graveyard of finance capitalism which was 2008’s Lehman collapse!

Given that the advance estimate of GDP is typically subject to absolute revisions equal in magnitude to the current headline itself and noting, too, that the BEA has itself expressed some misgivings about how well its seasonal adjustments perform in the first quarter of the year (perhaps due to the increasing weight of business conducted with those subject to the calendrical vagaries of the Lunar New Year?), we should really resist parsing this number too closely for fear that our comments will be outdated by the time the computer screensaver pops up, but this one was sufficiently rich in contrasts that a brief exegesis might be worthwhile.

Firstly, led by a 16.1% plunge in car sales, and compounded by an 8% decline in outlays on the gas with which to fill’em up, the personal consumption measure came in at a bare 0.3%, the weakest reading since the dark days of 2009. Inventories grew at only a quarter the amount seen at the end of 2016, while overall government spending actually fell 1.7% annualized, something unparalleled in the past three years.

Conversely, we are invited to believe that gross fixed investment shot up 10.4% – the most in five years – and that, within that total, spending on non-residential structures rocketed ahead by 22.1% – a jump unheard of in the past half-century and more. Who needs an ‘infrastructure package’, if that is really the case?

At this point, we invite the reader to join us in casting our minds back to the dim recesses of history; all the way to – oh – last month, shall we say?

At that time, a common complaint was that consumers were stretching their budgets, especially to buy autos, and that, notwithstanding this, car lots were filling up with unwanted inventory. Even before the new boys in the Beltway got to work building walls and such like, government spending – and hence the associated deficits – were said to be veering out of control. Finally, it was generally a matter of concern that US businesses were too busy engineering their balance sheets to bother with any actually engineering – particularly of the capital investment kind – out in the real world.

Insofar as it goes, QI’s GDP estimate would suggest that all of those imbalances were in the process of being corrected – and also, incidentally, that so-called ‘final sales’ (those net of inventory accumulation and decumulation) were not only biased towards capital formation, but were running more than twice as fast as the headline number at a much more respectable 1.6% annualized.

So, if these numbers are in any way representative of reality and survive the revisions – where’s the beef?

[For those who would prefer to watch this report, you will find it HERE]