Headline growth for the U.S. economy in 1Q 2019 hit 3.2% quarter-over-quarter while year-over-year growth accelerated +24 basis points to 3.21%.
Those results belie an underwhelming reality.
- Inventories and Net Exports accounted for 53% of the Headline “beat” of 3.2% – good for the largest share since Q1 of 2014
- Real Final Sales (the cleanest read on underlying demand) decelerated -63bps to 1.44% QoQ SAAR – the slowest pace since Q4 of 2015
The U.S. Government also used a #fakenews DEFLATOR (for inflation) of 0.64%. Understating inflation results in overstating GDP Growth.
If nominal GDP was deflated using the government's own CPI inflation number the headline GDP print would have been HALF at +1.56%.