The GDP data in the Q1 came in at 1.4%. Today we learned the advanced GDP for Q2 came in at 2.8%.
If you looked at the component contributors or subtractions from the total GDP number:
For Q1:
- Consumption +0.92%.
- Investment, +0.77%
- Government, +0.31%
- Net imports/exports -0.65%
The sum comes to the GDP of 1.4%
For Q2:
- Consumption, +1.57%.
- Investment, +1.40%.
- Government, +0.53%.
- Net imports/exports, -0.72%
The sum of those components comes to GDP of 2.8%
Now, within the investment component is inventory. Inventories can fluctuate up and down and indeed they did swing from a negative contributor in Q1 (-0.42%) to a positive contributor (+0.82%) in Q2.
What if the GDP numbers for each was adjusted for the inventory swings?
Inventories in the Q1 subtracted -0.42% from the GDP. If that is added back, the growth ex inventories comes at around 1.8% in Q1.
For Q2, if you were to subtract the inventory gain of 0.82% from the total 2.8% gain, the GDP would be just below 2.00%
So combining the two quarters GDP ex the inventory, the growth comes in around 1.9% which is about the trend growth.
Soft landing?
The Fed may look at it that way vs the Q2 is twice as strong.
