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First quarter GDP is 3.2% but the underlying data is much weaker and is consistent with a slowing economy.
At CEA our blog post always featured PDFP (what BEA calls “Final Sales to Private Domestic Purchasers”). Statistically this is a better predictor of future GDP prints. This quarter it was a weak 1.3%.
PDFP includes two components: consumption which was weak this quarter, slowing to 1.2%. And non-inventory investment which was also weak at 1.5%.
PDFP excludes the volatile components that happened to drive growth this quarter: inventories which added 0.7pp, net exports which added 0.5pp, and govt which added 0.4pp.
GDP is volatile so this is weak signal. But to the degree today’s data has any info it is that the underlying trend of consumption and investment is weakening. And no reason to believe we’ll get lucky again next quarter with inventories, NX, and govt.
(For context, a friend pointed out this is the weakest quarter for PDFP since 2013-Q3, so this is a case study in why this was our biggest focus. You can read Box 2-1 in this for more background.) obamawhitehouse.archives.gov/sites/default/…
And yes, I do point out when PDFP is much higher than GDP growth also. For example:
(Sorry, small correction on the above. The volatile NX added 1.0pp to Q1 GDP. Exports themselves were responsible for half of that.)
