The BEA revised second-Quarter GDP lower by 0.2 percentage points to 2.1 percent. GDI was 0.5 percent.
GDP vs GDI Chart Notes
- Real means inflation adjusted
- GDP is Gross Domestic Product
- GDI is Gross Domestic Income
- Real Final Sales is the bottom line assessment of GDP. It excludes inventories which net to zero over time.
Gross Domestic Product, Second Quarter 2023 (Second Estimate)
- Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the second quarter of 2023 , according to the “second” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 2.0 percent.
- Current-dollar personal income increased $232.1 billion in the second quarter, a downward revision of $3.9 billion from the previous estimate.
- Disposable personal income increased $284.5 billion, or 5.9 percent, in the second quarter, an upward revision of $36.3 billion from the previous estimate. Real disposable personal income increased 3.3 percent, an upward revision of 0.8 percentage point.
- Personal saving was $892.3 billion in the second quarter, an upward revision of $22.7 billion from the previous estimate. The personal saving rate—personal saving as a percentage of disposable personal income—was 4.5 percent in the second quarter, an upward revision of 0.1 percentage point.
- Real gross domestic income (GDI) increased 0.5 percent in the second quarter, in contrast to a decrease of 1.8 percent in the first quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 1.3 percent in the second quarter, compared with an increase of 0.1 percent in the first quarter
Corporate Profits
- Profits of domestic financial corporations decreased $47.8 billion in the second quarter, compared with a decrease of $9.4 billion in the first quarter.
- Profits of domestic nonfinancial corporations increased $17.1 billion in the second quarter, in contrast to a decrease of $102.9 billion in the first quarter.
- Rest-of-the-world profits increased $20.2 billion in the second quarter, in contrast to a decrease of $9.2 billion in the first quarter.
Major Discrepancy Between GDP and GDI
GDP and GDI are two measures of the same thing, one from a product perspective, the other from an income perspective. Over time they merge.
The last three quarters of GDP starting with 2022 Q4 are 2.6 percent, 2.0 percent, and 2.1 percent. The last three quarters of GDI starting with 2022 Q4 are -3.3 percent, -1.8 percent, and 0.5 percent.
GDI is still consistent with a recession starting 2022 Q4. GDP isn’t. The NBER, the official arbiter of recessions, averages the two measures. The result is inconclusive for Q4 and Q1 combined.
Don’t be surprised if the NBER declares we had a recession and it is already over. It’s happened before.
Job Openings and Quits are in a Steep Plunge. The Fed Will Be Pleased.
Meanwhile, please note Job Openings and Quits are in a Steep Plunge. The Fed Will Be Pleased.
And The Labor Leverage Ratio, a Measure of Wage Bargaining Power, Is in Retreat.
1) There is a war between workers and mgt about power and control : WFH, 40% pay raise, retirement, health benefits, 32 hours/week…both sides are deeply divided. It’s a fight about corp existence, life and death.
2) ES daily has been turning around since June 16 high. ES at the top of the cloud.
3) After Jan 1973 all time high, an upthrust, the Dow dropped for 8 months, until Aug
1973 low. It rose in Sept and Oct to a lower high, during Nixon cooked Yom Kippur war, to escape Watergate.
4) The Dow reached an all time high in Sept 1929, an upthrust. It led to Oct 1929
plunge.
5) So far ES looks like H&S.
6) If we are in a recession the Dow has to show it in advance. It might be a lightweight
recession, or stepping stones decay that might end below Feb 2016 low, in a never ending pain that will last for years.
There’s something rotten in Denmark
Powell must feel like Sisyphus rolling that rock. As long as government deficits are this large, it will be almost impossible to extinguish the fires of inflation. Powell needs to speak out about the impending crash of the US dollar if our President and Congress don’t get spending under control. Sadly he does not have the gonads. History will judge him harshly. And it should.
No worries, Mish, you can start calling the next recession!
“ Don’t be surprised if the NBER declares we had a recession and it is already over. It’s happened before.”
Anything is possible.
However, whether that happens or not, is immaterial. We are still muddling along with slow growth.
And even with slow growth, we continue to consume MORE energy.
Oil Inventories continue to decline. With WTI above $80, the oil companies are raking is great free cash flow.
If we are in a recession why should CL rise. CL weekly is in a trading range since
Dec, osc around Oct 2018 high, inside the cloud.
CNQ close June 2022 gap.
That’s what makes a market . Differences of opinion.
With a couple of exceptions, oil demand still goes up in recessions. Just more slowly than without the recession. In a severe downturn, yes, demand can drop, as in 2008 and 2020.
If Mish is correct, and we are already in recession, then it would appear to be a mild one. After all, oil demand is still rising.
And demand does not have to rise for oil to stay around $80. And at $80, most oil companies are gushing cash flow.
CNQ has a breakeven of $30WTI. At $80 WTI, they are using that cash flow to pay down debt and buy back shares, as well as pay a good dividend. They are a great long term hold.
If you think I am wrong, then you should be betting against CNQ. Since it is near an all-time high, perhaps it is ready for a pullback.
Best of luck with your investments.
I am not betting against CNQ. I took profit today
“Don’t be surprised if the NBER declares we had a recession and it is already over. It’s happened before.”
So are we moving into a brand new expansion now? Is the recession talk over?
The fed deserves some credit for the “soft landing” after all. Perhaps they are not as clueless as some people think. Perhaps Bidenomics is working fine even with all the “insane” green and IRA policies. Only time will tell but I keep raking in the profits month after month. Choo! Choo! The money train is chugging along….
Isn’t it possible that one segment of the population is doing well while the majority aren’t? Why would the Fed or Biden deserve praise if wealth disparity is growing? And a small reminder about bragging about money: pride goeth before the fall. Most people understand that people who boast about money make far less than they claim.
“Isn’t it possible that one segment of the population is doing well while the majority aren’t?”
And when in the history of time has that NOT been the case? You think every Roman 2000 years ago had an equal amount of wealth? Russians? Ottomans? Incas? Mayans? Ever hear of the Pareto Principle? Look it up.
Why do you blame the Fed or Biden for wealth disparity since it has existed since the beginning of time? Pick up your favorite religious book and tell me what it says about disparity. Unemployment is at 3.5%, pilots at two airlines, UPS and others have recently been given huge 40% raises. What more do you want? Everyone to have an equal amount? That’s called communism.
There are monetary winners and losers all over the globe, some think it’s bad luck others think it’s a lifestyle choice (poor decisions and poor choices). I don’t like being poor so I’ll keep raking in the profits and I’ll accept the consequences of my actions both good or bad.
Having said all that…CHOO! CHOO! The money train is loaded to the rim and chugging along. CHOO! CHOO!
ha ha ha. so true. i’m a hobo in a box car getting a free ride. no joke.
There is no such thing as a ABCT curative recession. There’s too much money to mop up.
The economy is being run in reverse. The GINI coefficient has headed higher. Asset prices need deflated.
Another number adjusted down way after the fact. What a surprise.
If you get all your economic news from mishtalk then you aren’t going to hear about many numbers being revised up. Not a criticism just an observation, lots of interesting stuff here.
Which numbers are being revised up?
Tons of stuff. Since we are talking about GDP for example, the initial estimate of first quarter 2023 was 1.1%, the second estimate was 1.3%, and the final estimate was 2.0%. I hope we can agree those are upward revisions.
What are some the others?
2.07 in actuality, so only .03 from 2.0 instead of 2.1.
And this number will be revised lower again.
Meanwhile The Fed blindly hikes onwards and upwards.
The fed will keep hiking till people stop bidding up house prices. When prices start to fall, we’ll find out how solid all this 7% lending has actually been.
If proves not to be solid, China looks like they’ll soon be in need of a hot war dancing partner to pacify or dispose of their disgruntled young.
I think they’re more focused on employment numbers. We also know from their own words they intend to hike even in a recession. It will not stop until either there are mass layoffs (and coincidentally more govt dependency) or major credit events (which seems likely considering the lack of liquidity) and if asset markets also tumble, they’ll look at that as a beneficial side effect.
The bond market is saying either liquidity or the economy is going to force The Fed’s hand sooner rather than later. I’d bet that it’s the liquidity side that does it, employment numbers lag.
26,000 flight attendants vote to strike. If they have any luck they’ll be getting 40% raises like pilots and UPS workers. Got more inflation?
https://thehill.com/business/4179581-american-airlines-flight-attendants-overwhelmingly-authorize-strike/
How inelastic do you think the demand for air travel is in an environment when people won’t even commute to the office?
If the attendants succeed, and the airlines attempt to pass the costs along, we’ll see demand destruction and deflation.
We’re going to see deflation as it is. The average consumer is approaching fully tapped out. Airlines would be stupid to negotiate here and should freeze them out. Let the attendants demand more money in the middle of a recession.
Of course there’s a lot of political pressure on both the unions and the airlines to make traveling like the elites do financially out-of-reach for average people. Save the planet and all that bullshit. They’re doing the same thing to food. Total social engineering.
correct. mish really missed the fed hikes lasting so long. but alas, i don’t think he like most out there understand what the fed really is all about. one mandate. one owner. the bankers in NYC. nothing else means squat. i don’t care how many papers and talks and congressional testimonies. face reality. see who started the fed and what they do. the NYC banks have shuttered thousands of regiional banks for a century now. a great game of kill off competition with control of a nation’s printing press for currency. i’ll tip my hat tomorrow to NY fed as a great grifter building and boys. the joke is on mish and most analysts. keep up the good r/e analysis mish. that you seem to have a great grasp of. no offense from my end. just reality.
lIFE IS A BITCH WHEN YOUR SHIFT KEY IS BROKE i KNOW YOU KNOW WHAT I MEAN dON’T YOU.
The vigilantes have very little control over the economy.
They can exert a lot of pressure on bonds if they choose.