Forget Q1 GDP, look at employment: Experts

Questions on Q1 GDP

Weak first-quarter gross domestic product growth fails to accurately portray current U.S. economic health, economists told CNBC on Thursday.

The economy grew at an annualized rate of 0.2 percent in the first quarter, the Bureau of Economic Analysis said last month in its first estimate. However, the agency on Wednesday acknowledged "issues" with its calculations, pledging fixes moving forward.

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That comes after CNBC reported last month that first-quarter GDP has been weaker than the other three quarters for the last 30 years. Taking those factors into consideration, investors should "ignore the noise" surrounding GDP, said Jeffrey Cleveland, chief economist at Payden & Rygel.

"Don't trust the GDP. Look at the jobs," he said in an interview on CNBC's "Power Lunch." (Tweet This)

Workers at the Bicycle Corporation of America plant in Manning, South Carolina.
Randall Hill | Reuters

Cleveland noted that he has watched nonfarm payroll employment numbers more than GDP. The metric has increased by an average of 250,000 over the last 12 months, he said.

By that indicator, the economy is standing on "really solid footing," he contended.

Joe Lavorgna, chief U.S. economist at Deutsche Bank, agreed that GDP concerns look overblown. He noted that "growth was certainly slow" in the first quarter, but the economy appears to be improving.

"I never really trusted the GDP numbers," he said Thursday on "Power Lunch."

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Lavorgna also outlined optimistic signs in the employment market, particularly jobless claims. Last week, claims for state unemployment benefits were a seasonally adjusted 274,000.

It marked an increase from the previous week, but still sat below 300,000 for an 11th straight week. A reading under that level signals a strengthening labor market.

CNBC's Steve Liesman and Reuters contributed to this report