Economy not as bad as GDP suggests: Economist

Does US have a gross domestic problem?

The U.S. jobs market and other data suggest the economy is stronger than the government's latest reading of first quarter GDP, Barclays' chief U.S. economist said Friday.

The revised reading for first quarter GDP showed the economy had contracted 0.7 percent, the Commerce Department said Friday, slightly better than economists' expectations of 0.8 percent.

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Barclays' Michael Gapen noted that the unemployment rate fell to 5.4 percent in April and that the Institute for Supply Management has found production growth in the manufacturing sector.

"There's a lot of of evidence to suggest that the labor market data and the ISMs are much better concurrent indicators of momentum than is GDP itself," Gapen said on CNBC's "Squawk Box." "So you need to cast your net wider and look at those as well."

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Further, Barclays found GDP is likely 1.5 percent better than what Friday's reading suggests after seasonally adjusting for the weak first quarter. "If the data were properly adjusted, then Q1 would be stronger, Q3 would be a little bit weaker," he said.

The unreliability of GDP data creates a false debate over quarter-to-quarter fluctuations and obscures the fact that the U.S. economy continues to grow at about 2 percent annually, he said.

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