Weekly Economic Report
It is reports like today’s unexpectedly strong real GDP report that make economic analysts pull out their hair. Real GDP was reported up a stellar 3.2% -- but (as anticipated by the Atlanta Federal Reserve GDPNow) trade was responsible for 1.0% of the improvement and inventories for another 0.7%. Thus, real final sales to domestic purchasers was up an anemic 1.4% -- and of that 0.4% was to government. Bottom line, at 1.0% this was the weakest quarter for real final sales to private domestic consumers since the second quarter of 2013. The softness was reflected in a weak 0.6% annualized gain for both the GDP implicit price deflator and the PCE deflator that the Fed watches so closely. This is similar to what happened back in 2015, when the deflator plunged to near zero.