Are we on a slippery slope of a recession, or was last quarter's weak GDP a turning point? This week's travel shortened e-letter looks at recent data and re-visits some thoughts on consumer spending from friend Joe Ellis' superb book called Ahead of the Curve. This week I wrote from a rainy Edinburgh, Scotland, although this afternoon was pleasant enough, allowing me to walk around some. But on to important matters.

Yesterday we learned that GDP for the first quarter was revised down from 1.3% to 0.6%. By anybody's definition that is an economic slowdown. The question is then begged, "Was last quarter the bottom or the beginning of the slide?"

You can make a good case that it was the bottom. A good part of the weakness was attributable to the lowering of inventories. Therefore, as inventories are re-built, then there should be a rebound. Further, today's new jobs number of 157,000 is a lot stronger than April's anemic (and revised downward) number of 80,000. And let's not forget that the ISM number came in at 55, which suggests manufacturing is beginning to rebound. If you are looking to be optimistic, there is sufficient data to maintain your beliefs.

The economy grew at a much slower pace last quarter, with GDP only moving forward by 1.1%. This week we look at why and see if we can mine the consumer spending data to give us clues about future growth. We are going to start a two part series inspired by a remarkable new book I am reading called "Ahead of the Curve," sub-titled "A Commonsense Guide to Forecasting Business and Market Cycles."

Joe Ellis was a partner at Goldman Sachs and was ranked as Wall Street's #1 retail analyst for 18 consecutive years by Institutional Investor. I caught up with Joe last time I was in New York as he explained his prediction process. I think there is real value here, and I suggest serious investors get a copy. Even though it was published by Harvard Business School Press, it is a very readable book. You can get your own at Amazon.com