According to the official news, the 2d quarter’s GDP grew by 3.4%. This after two quarters near 1%.
Now this is the advance, which will be followed in a month by a preliminary, which will be followed in September by the final. Which means the current number has a lot of guesses in it. Which in turn means that we could play over-under — as in, will the final be higher or lower.
But I’m not going to play that. The under – final report lower – is intuitively obvious. Worse, it’s predictably obvious even ignoring the tendency of the last few years of reports.
Employment didn’t make the huge gains a move from 1 to 3.5% should have shown. Housing (total sales) declined significantly. Wages were essentially flat. The price of oil went up. Retail sales were slow – growing, but only barely. That’s the major elements of PCE, PCI, and net imports, leaving us exports and government to change the picture.
My guess is that the final revision will show a number in the vicinity of 4Q2006 and 1Q2007. In the meantime, however, watch all the noisemakers do exactly what they did when the April report came out: “See? The economy is doing GREAT!”