Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  Real GDP Growth in Q1 Was Revised Slightly Lower to a -1.6% Annual Rate
Posted Under: Data Watch • Employment • GDP • Housing • Industrial Production - Cap Utilization • Inflation • ISM • Markets • Trade • Bonds • Stocks
Supporting Image for Blog Post

 
Implications:  Real GDP shrank at a 1.6% annual rate in the first quarter, but this does not indicate a recession.  Real gross domestic income (Real GDI), an alternative measure of economic activity that is just as accurate, was up at a 1.8% rate.  The problem with GDI data is that the first report doesn't arrive until one month after the GDP data, so very few people pay attention.  Closing the case against a recession in Q1 is that industrial production and jobs rose rapidly while unemployment fell.  The best news in today's report was that economy-wide corporate profits were revised up slightly for Q1, mostly due to profits at domestic nonfinancial companies.  The worst news was that GDP prices were revised up, with inflation at an 8.2% annual rate versus a prior estimate of 8.1%.  In other recent news, yesterday the Federal Reserve reported that the M2 measure of the money supply grew only 0.1% in May and is up a relatively moderate 6.6% from a year ago.  The economy still has to absorb the massive increase in M2 in 2020-21, which means high inflation for at least the next few years.  But, at least for now, the Fed has reduced the pace of money growth so that, if it maintains this lower pace, inflation can eventually return to lower levels. On the housing front, rapid price gains continued in April.  The FHFA index increased 1.6% in April and is up 18.8% from a year ago. The national Case-Shiller index rose 1.5% for the month and is up 20.4% versus a year ago.  In the past year, price gains have been led by Tampa, Miami, Phoenix, and Dallas, with the slowest gains in Minneapolis, Washington, DC, and Chicago.  Look for much more modest price gains by year end and close to flat national average home prices in the following couple of years.  In other housing news, pending home sales, which are contracts on existing homes, rose 0.7% in May, overcoming the headwind of higher mortgage rates.  For the factory sector, the Richmond Fed index, a measure of mid-Atlantic manufacturing sentiment, fell to -11 in June versus -9 in May.  Plugging this into our models suggests a decline in the national ISM index for June, but that the index should remain solidly above 50, signaling growth.       

Click here for a PDF version
Posted on Wednesday, June 29, 2022 @ 11:29 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2022 All rights reserved.