Everyone has been waiting for it, but it still hasn’t appeared.
this Bureau of Economic Analysis It was announced today that US real GDP grew at a seasonally adjusted annual rate of 1.1% in the first quarter. The first two quarters were close to historical averages. Today’s numbers are much weaker.
Real GDP annual growth rate from 2Q 1947 to 1Q 2023, historical average (3.1%) in blue. Calculated by multiplying the natural logarithm difference between GDP and the previous quarter by 400 times.
new data show Econbrowser Recession Indicator Index At 7.6%, it was around three months ago and well below levels that suggested a new recession had begun. Those who have been proclaiming for a year that a recession has arrived will have to wait a little longer.
Index of recession indicators based on GDP. Plotted values for each date are based only on publicly available GDP data as of the last quarter of the date indicated, with Q4 2022 being the last date shown on the chart. Shaded areas represent NBER recession dates, which were not used in any way to construct the index.
The Fed has been pushing the lever it controls (interest rates) in a direction that tries to slow GDP growth. This was first seen in residential fixed investment, which has fallen in each of the past four quarters.
But by far the biggest drag on first-quarter GDP came from falling inventories. Inventory investment is one of the most volatile components of GDP and is affected by big data revisions. Therefore, this is unlikely to be a major factor holding back GDP growth in the coming quarters. But the impact of higher interest rates on new home purchases and the spillover effects of bank concerns on the availability of credit to small businesses will continue to be significant headwinds.
