Will 1Q GDP Revision Cause Fed to Rethink Any Plans to Taper? – Fox Business

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– sometimes things aren’t always what the aircraft app to beat today we found out that are struggling economy grew and even slower pace than expected.

Only one point 8% of his wave worse than what the Commerce Department — just a month ago when it reported the number to be 2.4 percent.

So what does this mean for us now critics mean — Ben Bernanke be rethinking his plant and not pull back stimulus this year.

— – — – — – Chief investment strategist at Charles slot Schwab Liz and welcome back to show thank you so much for coming I’m.

Thankful it’s so nice to be here we surprised by that revision and how does have — It was a big revision it — certainly more than the typical revision all of that’s somewhat commonplace to get these revisions and let’s remember at the end of July we’ll get.

Another round of revisions for the entire prior year.

On it was a little bit odd that you had to lift the initial lifting consumer spending.

That was built into the higher numbers given the effect that we — on the economy that would come from the height of the payroll tax so.

To see the numbers revised down is not a big surprise and it wasn’t — it purely negative.

Number corporate profits actually were revised up the residential investment which is the housing component of GDP was revised up.

I don’t think it’s a needle mover for the — it’s it’s an entirely backward looking number at the first — really was — – — – for you in terms of strategy here what you think for the whole year.

— and now you know I — think we’ll get a little bit of a lift in the second half of the year.

— – Not to any — pride it’s gonna make people feel like — in robust growth mode but I think a lift relative to what will probably be a sub 2% first half of the year.

You know the interesting thing is that part of the big drag on the economy — – — federal government spending and to a lesser degree state local spending.

If you actually look.

Since the recession ended in June — 2009.

Since that point overall real GDP is only grown at a two point 1% pace at the very weak — yeah similar to what we seamlessly.

But the private sector cited the economy has grown at a three point 1% pace so most of the track has been and continues to be.

Government sector that’s likely to continue and it shows that there’s enough cushion in the private sector.

To off some of that offset some of that fiscal — do you think when Ben Bernanke came out and spoke last week he had his head this number.

Already know I don’t I don’t think he had — had this number nor do I think as I said it’s a needle — I think to the extent that September is the timeframe that would be the earliest point at which the Fed would start to taper purchases.

I’m not so sure what will matter at that point — first quarter GDP we’ll have a sense the second quarter GDP at that point we’ll have.

More leading indicator tight economic data and I think that’s what’s going to tend to move the needle for them.

It was interesting there was a rumor that was swirling around — Washington Post blog today.

Saying that’s an inside.

— folks are talking about maybe moving that time — from September 2 later in the fourth quarter whether there’s any validity to that.

Who knows — if anything if if the if they are moving the — a little bit — the start point in their minds I would guess it has more to do.

With the extreme — – yields we have seen right more so than any revision deport first clergy.

So what do you make — Vatican let’s move on to that big moving yields that it it has been a huge reaction to what he sat — it has spooked the markets it’s got a lot of people being about a lot of different things.

Have used changed any of your strategy as a result of what you’ve seen.

In now move.

Look I think part of the move — – reflected a view that the economic fundamentals were not improving and that the — upgrading of its assessment of the economy later this year and it to 2014.

Was unfounded.

And therefore they were becoming more hawkish — looking at tightening without the benefit of improved economic growth — the good news is is this week leaving.

First quarter revision to GDP aside.

Almost all of the economic numbers came out this week were universally positive all of the regional PMI is the housing data consumer confidence.

On that is starting to support their view that it’s as we’re calling it good reasons why the Fed is considering tapering here is not because inflation is going up but does — so.

Then cut interest rates that does — undo any of that — – — – — do it — guys the advances that we’ve seen — housing all the good stuff we’ve seen in the house except — doesn’t really — housing there’s a concept that I pay a lot of attention to that I don’t think is widely watched with in housing which is a concept called the — mortgage rates so.

You know we talk about GDP the headline number the number we care — is real GDP so it’s.

Nominal minus inflation equals real GDP — you can apply the same to housing.

The nominal mortgage — important that’s so was what’s happening to the prices of homes that your real Morgan tree right — right now we’ve got mortgage rates having ticked up to over 4% we’ve got 13% appreciation in home prices.

So four minus thirteen is actually — negative 9% real mortgage rate it’s pretty attractive to — a negative.

We’ll mortgage rates so I think.

Only at the point where prices would start to come down — that would happen at the same time yields were going up — the equation start to work against the affordability factor for now.

You know going from three and a half to four point two I don’t think it’s a big game changer for housing as long as prices are coming up and as long as it doesn’t go up too much more — – — do you think the latest reports are — you know.

— like five and a half six its hard to say I think if if we do not start to see significant upward.

Adjustments to GDP numbers for the second half of the year into 2014.

There’s very little reason to think that we’re going to continue to see.

Bond yields spike here so I think we have a little wiggle room left it’s hard to say at what point it really starts to — trees I feel better with — taking so much for coming nine euros — – — we really appreciate it thank you very much that are banking system.