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Unusually harsh winter slowed the U.S. economy, and the U.S. Commerce Department’s final estimate of first-quarter GDP was revised downward from an annualized contraction of 1 per cent to a 2.9-per-cent rate.
Unusually harsh winter slowed the U.S. economy, and the U.S. Commerce Department’s final estimate of first-quarter GDP was revised downward from an annualized contraction of 1 per cent to a 2.9-per-cent rate.
(Fred Lum/The Globe and Mail)

What if that brutal first quarter was no anomaly?

Investors didn’t panic after the U.S. economy shrank an alarming 2.9 per cent in the first quarter, at an annualized pace. Will they keep their cool if the economy also disappoints in the second quarter?

Economist Gary Shilling doesn’t think so: “A low second quarter real GDP number will kill the conviction that the first quarter drop was only an anomaly and it will spawn agonizing reappraisals for the rest of the year,” he said in his latest note. “It could put the Fed on hold at least into 2016 and be great for Treasury bonds. But for stocks, look out below!”