Beware of the GDP "spike"
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Hours worked jumped to a massive 13.5% (YoY) spike in April and GDP is expected to follow.
Jim Stock's Weekly Economic Index predicts a similar 12.2% (YoY) spike in Q2 GDP.
Apologies for being the bearer of bad news but that spike is entirely due to base effects: the year-on-year change is measured from the pandemic low of April 2020.
In real terms, hours worked are still 3.8% below their Feb 2020 level and GDP for Q2 2021 is expected to come in at close to the peak in Q4 of 2019.
Quote for the Week
The essence of investment management is the management of risks, not the management of returns.
~ Benjamin Graham.
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Colin Twiggs is director of The Patient Investor Pty Ltd, an Authorised Representative (no. 1256439) of MoneySherpa Pty Limited which holds Australian Financial Services Licence No. 451289.
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