GDP was reported this morning and after doing some homework, here is a quick breakdown of it. The headlines came in at 2%, which isn’t bad. However, one must determine how that number is made up. Similar to unemployment rates, the headline GDP number is also a bit misleading.
1.44% of the 2% came from a temporary inventory build. Final sales is GDP minus inventories and that came in at .6%. This number is down from .9% last quarter. Now the GDP number doesn’t look so positive.
Imports decelerated while the private inventory investment and personal consumption expenditures accelerated. Consumer spending increased by 2.6% from the previous quarter of 2.2%. However, since many goods and services were imported, the trade deficit lessened the overall GDP. Imports grew 17.4% (down from 33.5% in the previous quarter). Exports grew at 5%. Federal government spending rose 8.8%. Defense spending was up 8.5% and non-defense up 9.6%. This data does not seem to have changed any expectations of the Fed for next week.
As always, do your own homework to see if you agree. Good luck out there.
Mike
No positions mentioned
GDP Source
