http://www.theglobeandmail.com/globe-investor/investment-ideas/features/experts-podium/less-than-meets-the-eye/article1558246/

I have said time and again that the three most dangerous things an investor can do are: to ignore the primary trend, which is one of deflation; to dismiss the new paradigm, which is a secular credit contraction; and to fail to differentiate between an organic economic recovery and one that is artificial – a dangerous temptation today as relentless government intervention gives rise to what is, at best, a statistical mirage.

Last week , I described how every penny of the Canadian recovery owes thanks to the collective support of the Department of Finance, Canada Mortgage and Housing Corp., and the Bank of Canada in underpinning a housing rebound that is looking bubbly with each and every passing day. In the United States, the economic skew from government intervention is equally acute.

While many economists will undoubtedly rejoice over the strongest U.S. headline gross domestic product results in six years, the first-quarter number actually came in a tad light, relative to expectations. It was also a very mixed performance, from a sector standpoint. Real GDP in the United States expanded at a 3.2-per-cent annual rate versus the 3.4-per-cent rate that the consensus had penned in, and once again, the mathematics of a renewed inventory build was responsible for half the GDP growth last quarter.

No doubt the consumer was in a better buying mood in the first quarter, with spending rising at a 3.6-per-cent annual rate, but if truth be told, if not for the drawdown in the savings rate (to 3.1 per cent from 3.9 per cent) household expenditures would have barely exceeded a 2.5-per-cent annualized pace. The savings drawdown, along with the fact that real personal income, excluding government transfers, basically stagnated in the first quarter, makes me think this rebound in consumer spending growth was more of a blip than a sustainable trend.