Real GDP rose 2.4 percent in the second quarter of 2023, seasonally adjusted, annualized.
GDP and GDI Chart Notes
- Gross Domestic Product (GDP) and Gross Domestic Income (GDI) are two measures of the same thing, both from the Bureau of Economic Analysis (BEA).
- GDI numbers are not available for the initial estimate for the quarter by the BEA.
- Real Final Sales is the bottom line estimate of GDP. The difference between GDP and RFS is inventory adjustment that nets to zero over time.
The Bloomberg Econoday consensus estimate for GDP was 1.5 percent. The BEA Report of 2.4 percent handily beat expectations.
2023 Q2 Numbers Seasonally Adjusted Annualized Rate
- Real GDP rose 2.4 percent.
- Real Final Sales (RFS) were up 2.3 percent.
- Inventory adjustments subtracted 0.1 percentage points (PP) from GDP.
- Real Final Sales to Private Domestic Purchasers rose 2.3 percent.
- Personal Consumption Expenditures (PCE) rose 2.6 percent.
- The PCE price index rose 4.1 percent.
- Gross Private Domestic Investment rose 5.7 percent. Credit the Inflation Reduction Act.
- Residential Investment fell 4.2 percent.
- Net Exports fell 10.8 percent.
- Durable Goods spending rose 0.4 percent.
2023 Q2 Contributions to GDP
- Personal Consumption Expenditures (PCE) contributed 1.12 PP.
- Services, a component of PCE, contributed 0.95 PP.
- Residential Investment subtracted 0.16 PP
- Gross Private Domestic Investment added 0.97 PP.
- Change in Private Inventories added 0.14 PP.
- Net Exports subtracted 1.28 PP while Net Imports added 1.16. The pair nearly cancelled.
- Government consumption expenditures added 0.45 PP.
GDP Contribution Synopsis
PCE Services, Private Domestic Investment, and Government spending are the three main components at 0.95 PP, 0.97 PP, and 0.45 respectively.
Housing, net import/exports, and inventories had little impact.
Real GDP and GDI in Billions of Dollars
Real GDP and GDI in Billions of Dollars Since 2003
Over time, GDP and GDI match. Revisions eventually take care of things.
The NBER, the official arbiter of recessions, averages GDP and GDI in determining recessions. We do not have a GDI number to report for 2023 Q2.
But note that GDI lagged in the Great Recession as well (first blue box in the above chart).
Averaging GDP and GDI for the 2022 Q4 and 2023 Q1 nets to something close to zero. The economy is not humming along as widely believed.
EVs
The Auto industry is tooling up for EVs as part of the preposterously named Inflation Reduction Act.
But Despite Huge Incentives, Supply of EVs on Dealer Lots Soars to 92 Days
Why build cars that nobody seems to want?
Beware the Huge Negative Lag Impact of Three Rounds of Covid Stimulus
Estimates from econometric studies indicate that the government expenditure multiplier is positive for the first four to six quarters after the initial deficit financing, then turns negative after three years. The lag now begins to bite.
For discussion, please see Beware the Huge Negative Lag Impact of Three Rounds of Covid Stimulus
I don’t trust data that’s guessed at and then adjusted.
There will be no recession until 1st time unemployment claims hit at least 300K, stays there for at least 6-8 weeks and moves towards 350K, offering a strong signal. Likewise, the 3M continued unemployment claims is the general threshold for the NBER to declare an “official” recession.
It’s that simple, people, so, Mish, feel free to go on a recession watch hiatus for a good long while.
Any slightest turn towards a recession will be met with QE and fiscal support in favour of big business . The US and EU governments will make sure the only the mid to lower income workers will feel any adverse affects from any economic slowdown.
Worst recession ever.
Part of the services and private investment could be an echo of government spending, on infrastructure, chips, not to mention expanding (capEx) capacity in the weapons and ammunition industries on the Ukraine war, much of which seems to come from billions found by the Pentagon in accounting errors (?!), and gearing up for more exports to EU Nato countries.
Not to mention the LNG boom, Putin’s done the U.S. a lot of good.
.
At the time the fake GDP was invented, government were running balanced budgets, and printing money out-of-thin-air would have been punished by jail.
But what do you do when the system is broken, announce it publicly?
Muddling through again. Glad I stayed invested.