Reclaiming Common Sense

1.2The preliminary Second Quarter GDP was released on Wednesday August 30th. This was the "second read" of the economic growth for the country. The revised Annualized GDP was 3.0%. In theory, if the economy grows at the rate we have seen so far the economy will grow at 3% for the next twelve months. The Gross Domestic Product, GDP, is a lagging economic indicator. This data covers the period from April through June of this year.

The Highest Second Quarter Annualized GDP since 2014. This 3.0% growth rate is higher than that was recorded during 2015 and 2016. It was also greater than the second quarter annualized GDP of 2005, 2006, 2008, 2009, 2011, 2012, and 2013. This should be received as very good news.The Personal Consumption and Expenditures (PCE) data, as well as the Gross Private Domestic Investment (GPDI) data, for the second quarter were virtually increased across the board.The data for net exports and for Government Consumption were virtually reduced across the board.

Equally Impressive Trend for the Real GDP. The Real GDP is the growth of the economy during the past twelve months. The Real GDP was an anemic % during the Second Quarter of 2016.  The revisions for the Real GDP data are similar to the revisions to the Annualized GDP. PCE and GPDI data were virtually all revised higher while virtually all the data for the Net Exports and Government Consumption were revised lower.  This marks the fourth consecutive quarter of improving Real GDP.

The economic data has been overshadowed by Hurricane Harvey and its aftermath, for good reason. The loss of life and devastation that is being experienced is more important that a lagging economic indicator. The problem is that if people aren't told that things are improving then they may believe the naysayers in the media that say that things are not well in the economy. It is important for people to hear that the economy is roaring to life. The one question that will need to be addressed during the upcoming months is: "Are we experiencing Real Growth or are we experiencing Real Inflation?"

It's the economy.