GDP Grows at 1.9%: Good or Bad?

Those that don't really follow the financial markets every day might have very different takes on the economy based on where they get their news.  Just look at the varying headlines across a number of news sources on today's Q2 GDP growth numbers:

      

Comments

[San Fran Sam]

Real GDP growth in the second quarter was not 1.9% despite what the headlines say.

Real GDP = Nominal GDP / GDP Deflator

GDP deflator? What's that? That is the reported inflation rate from the federal government. it is reported to be running about 3%. Do you really believe that inflation is that low?

If inflation is running higher than reported than GDP growth is lower.

Can you say "cooking the books"? I knew you could.

[dan]

another innovative idea -- nice work

[Vincent]

It is obvious that there are excessively many really dump traders in this market -- trading off the headlines (even dumber opinionated media imbeciles wrote those) without actually thinking and examining the numbers. (It explains as to why we are constantly up and down 200 points -- 4 times this week alone)

The "miss" for GDP estimates was due entirely to a much larger inventory valuation adjustment that cut a whopping 1.92% off the GDP number. The only reason the headline was at 1.9% (never mind that the forecasts were at 0.5% three weeks ahead of the report) was because inventories were valued lower. It does not reflect lower demand. 3Q GDP will be much higher because such low inventory levels are not sustainable.

It means 3Q GDP will be closer to 3%!