Gross Domestic Product (GDP) is the broadest measure of economic growth. The U.S. GDP grew 6.4% in the previous quarter. By any standards, that’s a remarkable growth rate. GDP for this quarter has dropped precipitously to a forecasted rate of 3.7%. At the start of the quarter, there were growth expectations of 6.5% from Oxford Economics and Morgan Stanley.
Typically, a 3.7% growth rate would be considered exceptional. However, measuring a $21 trillion economy is complicated and includes some mathematical estimates. I won’t run us through the calculation, but here’s the gist of it: the demand had been so significant that the inventory drawdown was massive. The mathematical adjustment for this quarter accounts for nearly three percentage points. Blah, blah, blah. The point is, GDP is running closer to flat for this quarter than the headline forecast suggests.
I suspect that there are multiple culprits to blame for the drop in economic growth….