Botox seems weird to me.

People pay to be injected with tiny amounts of a virus so as to deaden nerves for a prolonged period of time.

I understand the goal… to change the way they look (in most cases).

But eventually the effects wear off and they have to do it again. It’s an expensive, losing battle, but it’s their money, and not my concern.

And yet, neighborhoods and newspapers gossip about who is having what work done to improve their appearance. That seems like a lot of effort.

If it’s that important to society to know, then maybe we need personal scorecards, perhaps in the form of temporary tattoos on the backs of people’s hands, noting with different symbols what’s been done, like a “B” for Botox or an “F” for filler.

That way, as with a great new haircut or hair color, we could immediately compliment the person… or simply talk about them later. But at least we’d have good information…

I thought about Botox last week when I saw the GDP numbers…

At 3.2% growth in the first quarter, the economy looks fabulous.

But just like Botoxers who look younger than they are, there’s more to the story than the headlines.

Our economy isn’t on the verge of recession… but we’re not shooting to the moon, either.

Upon closer inspection, the results weren’t as spectacular as they first appeared, they just looked that way because of some temporary issues.

Imports and Widgets

During the first quarter, we imported much less stuff than usual, most likely because of the trade wars. Speaking of our trade tiff with China, we still have an ongoing spat with Canada too.

The tariffs we slapped onto goods from these two countries altered buying behavior as expected, shifting demand to domestic suppliers.

That sounds good, but it costs companies more since domestic supplies tend to be more expensive, and it only lasts as long as the trade wars. When we come to new arrangements with our trading partners, the tariffs will fade away and imports will shoot higher, dampening GDP.

We also built a lot more widgets last quarter. American businesses built so many units that they stuffed supply chains with inventory.

This adds to production for the quarter, but it means that at some point in the future those same businesses will need to work off the excess supply, thereby reducing production.

If you don’t consider imports and exports, inventory changes, or government spending, we’re left with final private sales, which measures how much end users spent.

The naked number…

That stripped-down number came in at a much more modest 1.3% last quarter, down from 2.6% in the fourth quarter, the weakest reading since 2013.

But don’t make the mistake of dismissing strong growth numbers just because some of the details aren’t quite as pretty as they seem on the surface.

What if the trade wars stick around for a while? I didn’t expect them to last this long, so what’s another three or six months?

And don’t forget the other side of imports… exports. Companies are building more than 1,200 miles of pipeline across Texas to move oil and gas to the Gulf Coast where it will be available for export. Rising energy exports contribute to GDP.

All of these positive surprises add up, and they give us another chance to earn profits as Harry’s Dark Window forecast unfolds. I might not have expected the strong GDP showing, but I’m not upset that I’m making money on the rising markets as they react to the news.

Eventually though…

Eventually, GDP will roll over… we’ll walk into the teeth of the next recession… and the markets will fail…

But not today. The Botox on the economy is working…

It looks pretty good, just don’t get too close.

Rodney

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Rodney Johnson
Rodney works closely with Harry to study the purchasing power of people as they move through predictable stages of life, how that purchasing power drives our economy and how readers can use this information to invest successfully in the markets. Each month Rodney Johnson works with Harry Dent to uncover the next profitable investment based on demographic and cyclical trends in their flagship newsletter Boom & Bust. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. Along with Boom & Bust, Rodney is also the executive editor of our new service, Fortune Hunter and our Dent Cornerstone Portfolio.