US economic growth in the first quarter came in at just 0.7 percent, marking the third year out of the past four when the US economy managed growth of less than 1 percent in the first quarter.
US markets shrugged off the early 2017 weakness, and for good reason.
Most US economic data is seasonally adjusted to account for certain calendar effects, such as cold winter weather in the first quarter, auto factory retooling in summer and retail sales and employment increases during the fourth quarter’s holiday season.
However, in recent years, we’ve seen a trend toward improper seasonal adjustments in the first quarter that are historically reversed in the second quarter. A significant portion of that weak first-quarter data likely reflects this residual seasonality rather than a real slowdown in growth.
Moreover, we continue to see signs of strength in other data series.