Get ready for a soft GDP report
When the government releases new GDP data Thursday morning, it is likely to show weak economic growth — but for quirky reasons that don't matter much in terms of the outlook for the months ahead.Economic growth is slowing as the initial post-pandemic bounceback fades. But the underlying growth trend in the first three months of the year is likely to be stronger than the headlines suggest.The Bureau of Economic Analysis will publish its preliminary estimate of first quarter GDP at 8:30 a.m.
Any number lower than 2.3% would be the softest growth since mid-2020, when the pandemic recovery began.A major factor driving the softness is inventory adjustments. While companies were building their depleted inventories in the first quarter, early data suggests they did so less rapidly than in the fourth quarter, which in the arithmetic of GDP subtract from growth.
But inventory adjustments tend not to presage future economic activity. Consumer spending and business investment tend to be more self-sustaining and thus tell a more accurate story about the economy's underlying strength or weakness. Forecasters expect those to be strong.set to drag down the overall growth numbers is a widening trade deficit. That reflects a combination of import growth, reflecting strong domestic demand, and flatlining exports due to softness in the rest of the world.
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