The only saving grace of the GDP report was its headline +2.6%. As it turns out, Net Exports added 2.8 percentage points, and for the wrong reasons. Excluding Net Exports, the domestic economy’s GDP growth was -0.2%. The Recession continues. While the country still has a large negative balance of trade, it is the change that plays into the growth of GDP. Because of the dollar’s strength, the dollar value of exports rose. Yet, despite that strong buying power, imports fell. Lower imports tell us something about the U.S. consumer.
Final sales to private domestic purchasers were flat (less than 0.1% at an annual rate compared to +0.5% in Q2, +2.1% in Q1, and +2.6% in Q4/21. The chart at the top tells the real story about a weakening U.S. consumer (the black bars – note the lack of such on the right-hand side).
Listen to the podcast to learn more