The Bureau of Economic Analysis announced today that seasonally adjusted U.S. real GDP grew at a 2.8% annual rate in the first quarter. That’s close to the long-run historical average of 3.1%, and continues what has now become a fairly impressive record of an economy that continues to chug along despite constant predictions of its imminent demise.
Quarterly real GDP growth at an annual rate, 1947:Q2-2024:Q2, with the historical average (3.1%) in blue. Calculated as 400 times the difference in the natural log of real GDP from the previous quarter.
The new numbers put the Econbrowser recession indicator index at 4.0%. That’s historically a very low level, indicating unambiguous continuation of the economic expansion that began in 2020:Q3.
GDP-based recession indicator index. The plotted value for each date is based solely on the GDP numbers that were publicly available as of one quarter after the indicated date, with 2024:Q1 the last date shown on the graph. Shaded regions represent the NBER’s dates for recessions, which dates were not used in any way in constructing the index.
Many analysts commented that the 2.8% Q2 estimate seems a sharp improvement over Q3’s 1.4%. But inventory swings, which tend to be transitory, account for most of the difference. Without the draw-down of inventories in Q1, real final sales would have been up 1.8%, and without the build-up of inventories in Q2, real final sales would have been up only 2.0%.
To paraphrase Mark Twain, reports of the death of the U.S. economy have been greatly exaggerated.
Thanks for this insightful coverage which is so much more honest and helpful than that silly Faux Business News clip I noted earlier. Now I get Faux News wants to put a damper on good news but they missed the boat. This however was on point:
‘Many analysts commented that the 2.8% Q2 estimate seems a sharp improvement over Q3’s 1.4%. But inventory swings, which tend to be transitory, account for most of the difference. Without the draw-down of inventories in Q1, real final sales would have been up 1.8%, and without the build-up of inventories in Q2, real final sales would have been up only 2.0%.’
Whether we take the average of real final sales or real GDP growth, the implied 2% per year is basically tracking the growth in potential output.
My apologies for going off topic but more evidence that AG Barr was a Trump toadie:A Report of Investigation Into the Department’s Release of Public Statements Concerning a Luzerne County, Pennsylvania, Election Fraud Investigation in September 2020
https://oig.justice.gov/sites/default/files/reports/24-082.pdf
This report describes the Department of Justice (Department or DOJ) Office of the Inspector General’s (OIG) investigation into allegations of potential misconduct committed in connection with DOJ’s issuance of several public statements regarding an ongoing DOJ criminal investigation into alleged election crimes in Luzerne County, Pennsylvania…The initial MDPA statement and the letter raised questions about the Department’s
compliance with its own policies against commenting publicly about ongoing, uncharged investigations and its motivation for releasing public statements in the middle of an election cycle highlighting discarded mail-in ballots and, contrary to long-standing Department practice, specifying the name of a candidate for whom the votes were cast on the discarded ballots. The OIG initiated an investigation into the circumstances
surrounding the issuance of Freed’s public statements to determine if any DOJ policies were violated, including various provisions of the Justice Manual and the Department’s Election Year Sensitivities Memorandum….As detailed below, our investigation found that then Attorney General Barr was personally involved in the events in question and called Freed by telephone twice to discuss the Luzerne County matter prior to the initial MDPA statement being issued
OK this is long story involving a mere 9 ballots. Barr was personally involved in the decision to publicize an incident from the 2020 election – nine mail-in ballots for Donald Trump being discarded in a dumpster in Pennsylvania – that flamed the false narrative of widespread voter fraud. Investigators ultimately determined that the ballots were discarded in error by a contractor, and no charges were brought. But of course was all too happy to help the boss to spread the flames with his false Stop the Steal BS.
The court issued a 1989 ruling in Texas v. Johnson in which the majority argued that a man who burned the American flag was using a form of “symbolic speech” protected by the First Amendment. In response to the decision, Congress passed the Flag Protection Act of 1989, which sought to make it illegal to burn a flag. However, the court issued a responding decision in 1990 in United States v. Eichman that said the Flag Protection Act was unconstitutional.
This is relevant today as some have strongly protested how the abuse of Palestinians by the Netanyahu regime (who BTW was allowed to politicize his terror before our Congress today). Of course Trump the wannabe tyrant has a plan – Trump called for those who burn or damage the American flag to receive a “one-year jail sentence.” “People will say, ‘Oh it’s unconstitutional.’ Those are stupid people, those are stupid people who say that,” Trump said. “We have to work in Congress to get a one-year jail sentence. When they’re allowed to stomp on the flag and put lighter fluid on the flag and set it afire, when you’re allowed to do that, you get a one-year jail sentence and you’ll never see it again.
Yes Trumpland will make Putin’s Russia look like a democracy.
GDPNow had Q2 growth at 2.6% in yesterday’s estimate, really close to the official print. Anyone surprised by the 2.8% reading hasn’t been paying attention.
Real final sales up 2.0%, good, yes, but final sales to domestic purchasers were up 2.7%, private domestic purchasers 2.6%. That’s quite respectable:
https://fred.stlouisfed.org/graph/?g=1qBqF
Real disposable personal income was up 1.0%, slower than real PCE growth. That has been the case for a few quarters, as savings are spent down. Here’s the ratio of real PCE to real disposable income:
https://fred.stlouisfed.org/graph/?g=1qBrv
Running high, which calls sustainability into question. Mortgage refinancing would help.
The GDP report brings new data on personal income and expenses. Here’s a look at personal income payments and interest income:
https://fred.stlouisfed.org/graph/?g=1qBwH
Household interest income exceeds interest payments. Mostly, better-off households have interest income, while mortgage holders, credit card, auto loan and student loan borrowers make payments. On net, this picture represents a transfer from the less well off to the more well off.
Notice the sharp rise in interest payments since the Spring of 2022. That’s the result of higher interest rates. Because of the difference in scale, a similar-sized increase in interest income is less obvious. In fact, the rise in household interest payments from April 2022 to May 2024 accounts for 105% of the increase in household interest income. All of the increase in household interest income, plus another 5%, is due to household interest payments.
It is sometimes argued that higher interest rates are good because households earn more on their savings. That takes into account only one side of the ledger. Higher interest rates have been bad for household finances, on net.
“Ted Cruz drafted the ‘No Tax on Tips Act’ which would end income taxes on tipped income, but would not end payroll taxes on tips. The Center For American Progress found that Cruz’s bill “leaves out more than 95 percent of low- and moderate-wage workers,” because few workers in the overall U.S. workforce receive tips. Yet One Fair Wage’s analysis of tipped restaurant worker data shows that even among tipped workers, nearly two thirds (65 percent) would not benefit from this proposal either as they or their household do not earn enough money to pay income taxes. The subminimum wage for tipped workers, still just $2.13 an hour federally, means that tipped restaurant workers face among the lowest incomes of any workforce, the highest rates of sexual harassment of any workforce, and the greatest economic instability of any work force. Even among the one-third of tipped workers who would benefit …”
https://static1.squarespace.com/static/6374f6bf33b7675afa750d48/t/669eb5ca5ed20a4a6492a00e/1721677260484/OFW_ShortChanged.pdf
Trump jumped all over this fraud as some sort of game changer. No – it’s a fraud designed to sugar coat their opposition to fair wages and to their pushing for more tax cuts for the rich.
Media Matters offers a good history of J.D. Vance’s transition from Trump critic to Trump Mini-Me-with-beard:
https://www.mediamatters.org/fox-news/jd-vance-donald-trumps-vp-pick-owes-everything-tucker-carlson
Tucker Carlson and Peter Thiel get a lot of the blame:
“Carlson — who earned notoriety for mainstreaming white nationalist talking points and concocting sinister counternarratives that minimize the violence Trumpists perpetrated on January 6 — played a key role in Vance’s right-wing rebrand. Indeed, the only figure who may loom larger in Vance’s story is Peter Thiel, the fascist billionaire who employed Vance and then spent millions supporting his 2022 Senate campaign.”
There’s lots more, most of which reveals a cynical lust for power.
“Vance also possessed a will to power, and unable to beat the MAGA movement, he joined it.”
Sounds like a lot of Republicans. But 46 appearances on Tucker Carlson’s show? Steve Koptis is jealous.
[Vance] condemned the Kyle Rittenhouse trial as “child abuse masquerading as justice”
Seriously? Rittenhouse would have been convicted for murder but the Court allowed this punk to fake all sorts of trash before the jury. But of course the MAGA crowd had to make a murdered their hero since he shot a few lefties.
Rittenhouse’s father is Mexican and his step father of Jewish ancestry. Please learn actual facts.
what does that have to do with the criminal behavior of Kyle?
Fascist??? Please. Stop misrepresenting that term. Thiel is paternally Jewish and a globalist.
Peter thief is neither jewish nor a globalist. please get your facts straight.
Media Matters made the claim about fascism, so take you know-it-all lecture to them.
Before you do, you should learn a couple of things yourself. First, read the link in the Media Matters article explaining the basis for the fascism accusation against Theil. Second, go learn what “fascism” means. Nazis were fascists, but not all fascists are Nazis. It is entirely possible to be of Jewish descent and a fascist.
It is amazing how long your recession has been there (sarc)
@ Not Trampis You broke the rules AGAIN. ONLY Americans are allowed to tell jokes on how sometimes Americans are INCREDIBLY DUMB, Get $200 and go back to the start of the game board please.
Menzie – now that Biden has passed leadership of the Dems to the next generation. Where are the reams of thoughtful editorials from the NY Times calling for 78-year old criminal felon, adjudicated rapist, and business fraudster Trump to step aside? Fox News – should not your talking heads be asking Trump that now – for the good of the country – it is time to exile himself to Mar-a-Lago? (Checking Fox News – oh geez – just the usual racist and sexist attacks on Kamala Harris).
Also can some reporter in corporate media explain the Trump obsession with Hannibal Lector to us? At every rally he carefully describes how Hannibal Lector would eat people for dinner and then he points at a woman in the crowd and asks Would you like to go to dinner? As George W. Bush would say of Trump –
“That was some weird s—,” Also – corporate media can we get some deep dives on Trump’s mental health?
Harris has injected some joy and hope into this election along with the promise of responsible governance – before it was gritty determination to save our democracy by Biden (thank you Joe!) and we still have Trump with darkness, eating people, and the promise of a dictatorship and grim retribution for his enemies – real and perceived.
Finally – with Personal Income report coming out later today – when do the sage and serious financial types at Fed give us a rate cut? Even the Wall Streeters are saying it is time – https://finance.yahoo.com/news/goldman-sachs-now-sees-fed-cutting-rates-as-soon-as-july-24-as-inflation-cools-201655733.html .
“Also can some reporter in corporate media explain the Trump obsession with Hannibal Lector to us?”
The thing to remember about Trump is that every accusation is projection — he himself is guilty of. And that his obsessions are about his crazy instinctual fearful id.
When Trump talks about Hannibal Lector eating your brain, he is expressing his own fear that Alzheimers is eating his own brain, just like his father’s. He’s showing the signs of dementia at about the same age as his father — slurring of words, inability to finish a thought, mixing up names. He’s losing it and he knows it. Hannibal Lector is the way he expresses that fear.
This was the experimental title of Prof Hamilton’s autobiograhy by the way. No sarcasm friends