The recent announcement from the Bureau of Economic Analysis has shed light on the current state of the U.S. economy. Real GDP grew at a rate of 2.8% in the first quarter, closely aligning with the long-term average of 3.1%. Despite constant predictions of economic downfall, the economy has sustained a notable performance, defying expectations.
- A Legacy of Growth:
- Quarterly real GDP growth from 1947:Q2-2024:Q2 showcases the historical average of 3.1%, represented in blue. This consistent growth trend highlights the resilience of the U.S. economy over time.
- Continued Expansion:
- The latest figures have positioned the Econbrowser recession indicator index at a low 4.0%, signifying a clear continuation of the economic expansion that commenced in 2020:Q3. This index reflects a positive outlook on the economy’s trajectory.
- Unpacking the Numbers:
- Analysts have noted a significant improvement in the Q2 estimate of 2.8% compared to Q1’s 1.4%. However, a deeper analysis reveals that inventory fluctuations, which are often temporary, have played a significant role in this variance. If we eliminate these inventory adjustments, real final sales would have seen more modest growth rates.
In the words of Mark Twain paraphrased for the modern context, the reports of the U.S. economy’s demise are exaggerated. The recent data paints a picture of a robust economy that continues to navigate challenges and exhibit resilience in the face of uncertainty. Embracing this momentum, we look towards a future of sustained growth and prosperity.
