The economy's 0.6% solution

It's always dangerous to read too much into the advance GDP estimates made by the Bureau of Economic Analysis--they're subject to revision in subsequent months, and the changes can be substantial. But today's report that the U.S. economy grew at an estimated 0.6% annual pace, adjusted for inflation, in the first quarter is nonetheless eye-catching.

It's eye-catching because that's exactly what it did in the fourth quarter of last year as well. And while most signs are that economic activity is currently contracting, the tax rebate payments that that began showing up in bank accounts this week may put second-quarter GDP growth in territory not all that far from +0.6% yet again. (Then again, it may not: I just got a report from Roger Kubarych at the German-Italian bank Unicredit, who's not a particularly pessimistic guy, and he says he's still expecting a GDP contraction of 0.75% to 1%, annualized and adjusted for inflation, in the current quarter.)

As for the third quarter, who knows. A lot will depend on whether housing prices, still careening downward in the most recent Case-Shiller survey, have begun to stabilize by then. But it is now looking at least possible that we'll get out of this housing semi-disaster with only a mild recession or even just a "growth recession" in which the economy slows but doesn't contract for any kind of sustained period--which is a much better fate than I thought awaited us a couple of months ago.