Editor's Note: Below is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”
For more analysis on Friday's U.S. GDP report, check out, "7 Tweets Summing Up What You Need to Know About Today's GDP Report."
Ya see, the thing about consuming stuff is that you need money (i.e. income) to do it.
And the thing about income growth – both aggregate private sector income growth and this morning’s ECI data for 1Q – is that they are both accelerating.
And the thing about both of those things is that the deceleration in consumption growth in this morning’s GDP release was less remarkable than the headline (i.e. QoQ %/GDP contribution) as it only decelerated -30bps on a YoY basis …. and improving income growth should continue to support household consumption capacity over the nearer-term.
And that’s the thing about things …. You have to know which thing you are talking about.
