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Weekly wrap: Numbers, nudging

Kai Ryssdal May 30, 2014
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There was a lot to talk about in the economy this week.

For starters, the revised number for Gross Domestic Product growth came out yesterday and things are not looking so good. According to the Bureau of Economic Analysis, the economy contracted in the most recent quarter by one percent.

“I think this just shows that the economic growth we have now isn’t very robust. It’s no time to get complacent, but it’s not all bad news. Things are getting a little better,” says Cardiff Garcia from the blog FT Alphaville.

However, many argue that in one more quarter, we’ll be back in another recession. 

Nela Richardson, chief economist for the brokerage and referal site Redfin, believes we should fear these numbers because the goals set by the Feds are not as attainable as they make it seem. 

“What it would take for us to reach the 3 percent that the Fed has been forcasting is for us to grow in the second half of this year by 5 percent… I just don’t see any evidence of where this growth is going to come. And the reason I’m so troubled is because business investment plumeted so much… There’s no indication that the seeds of growth that would hit 5 percent in the second half of the year are actually starting to bloom in the spring swoon,” says Richardson.

The inflation number also came out this week. And it appears we had a small increase in inflation.

“It has all kinds of beneficial effects. It also can be a sign that the economy is starting to grow again. But the good thing about inflation when it doesn’t spike too quickly is that it means that households are incentivised to spend money because their money is going to worth a little bit less each year. It also means that businesses are incentivised to invest,” says Cardiff.

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