06/25/2014 01:23 pm ET | Updated Aug 25, 2014

Whoa! Whassup with That Big Negative Q1 GDP Revision?

Yes, you read those headlines right: real GDP contracted at a 2.9 percent rate according to revised data released on Wednesday. That's contracted, as in went down.

So, are we, like, back in recession (granting that a lot of people think we never left)?

Nope. That was a truly lousy quarter but it's highly unlikely to be repeated any time soon. The particularly bad winter weather played a role; both residential and commercial building were negative. Heavy inventory buildups in earlier quarters were reversed, which usually implies a positive bounce-back in coming quarters. Exports were revised down and imports up, so the trade deficit subtracted a large 1.5 points from the bottom line; that drag will likely diminish in coming quarters.

Health care spending, a strong contributor in earlier estimates of Q1 growth, went from contributing 1 percentage point to growth in an earlier vintage of Q1 GDP to subtracting 0.16 points in this update, suggesting earlier estimates of the pace of increased coverage were overstated. That doesn't mean they're not happening; it just means they'll be spread out over more quarters. [Update: check that -- a colleague tells me that what's really happening here is that people didn't use as many health services as first thought. I'll try to look further into this.]

BTW, on this health care revision, I don't think this is saying anything dramatic or structural about Obamacare. There are just a lot of moving parts here. As more people get insurance coverage and treatment, this will show up as more spending and higher GDP. At the same time, cost controls, which have initially been found to be quite effective, push the other way. The punchline is: don't expect to learn anything about Obamacare's impact on GDP from one quarter of data.

Year-over-year -- a good way to squeeze out some quarterly noise -- real GDP is up 1.5 percent. That's better than the headline number, but it too is actually a weak number. The trend over the last two years is 2.1 percent growth, which is about the economy's underlying trend growth rate considering productivity and labor force growth. I don't believe today's revisions really signal a decline in that trend rate and most analysts expect coming quarters to clock in at 2.5-3 percent.

But a) the general pattern in recent years is that acceleration predictions have been dashed, and b) getting back to trend or slightly above implies a continued slow slog in terms of closing output gaps and boosting incomes of the many who've been left behind so far in the recovery. Our economy is growing-the Q1 outcome is an outlier-but it's still under-performing and in need of supportive policy both on the monetary and fiscal sides.