{"id":57632,"date":"2021-05-01T07:33:26","date_gmt":"2021-05-01T12:33:26","guid":{"rendered":"https:\/\/olduvai.ca\/?p=57632"},"modified":"2021-05-01T07:33:26","modified_gmt":"2021-05-01T12:33:26","slug":"inflation-jumped-by-3-8-in-q1-real-gdp-rose-1-6-dragged-down-by-record-trade-deficit-and-drop-in-inventories","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=57632","title":{"rendered":"Inflation Jumped by 3.8% in Q1, \u201cReal GDP\u201d Rose 1.6%, Dragged Down by Record Trade Deficit and Drop in Inventories"},"content":{"rendered":"
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Inflation Jumped by 3.8% in Q1, \u201cReal GDP\u201d Rose 1.6%, Dragged Down by Record Trade Deficit and Drop in Inventories<\/a><\/h3>\n<\/header>\n
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Even the Fed\u2019s repressed inflation measure without food and energy rose 2.3% annual rate in Q1.<\/strong><\/p>\n

The US economy, as measured by inflation-adjusted GDP, grew by 1.6% in the first quarter from Q4 2020, according to the advance estimate of the\u00a0Bureau of Economic Analysis<\/a>\u00a0this morning.<\/p>\n

If you read in the headline that it grew by \u201c6.4%,\u201d that sounded impressive, but it was \u201cannualized\u201d; it essentially multiplied the quarterly growth rate (1.6%) by 4. There are not many countries outside the US, if any, that report \u201cannualized\u201d GDP growth rates, because they\u2019re really just misleading for normal people.<\/p>\n

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GDP inflation jumped by 3.8%, PCE inflation by 3.5%<\/strong>.<\/p>\n

The BEA\u2019s broadest inflation measure, the price index that roughly parallels the inflation adjustment to GDP (the \u201cprice index for gross domestic purchases\u201d), jumped by 3.8% annual rate in Q1, more than double the rate of 1.7% in Q4.<\/p>\n

The BEA\u2019s narrower PCE (\u201cpersonal consumption expenditure\u201d) price index jumped by 3.5% annual rate in Q1.<\/p>\n

And the BEA\u2019s price index that has become the Fed\u2019s measure for inflation, \u201ccore PCE\u201d (PCE without food and energy) rose by 2.3% annual rate, tracking above the Fed\u2019s former target of 2.0%. \u201cFormer target\u201d because now the Fed is looking for inflation above 2%.<\/p>\n

GDP in dollars<\/strong>.<\/p>\n

In dollar terms, real GDP in Q1 amounted to a \u201cseasonally adjusted annual rate\u201d of $19.09 trillion. This was still down about 0.9% from the peak in Q4 2019 \u2013 catching up:<\/p>\n

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Consumer spending rose 2.6%<\/strong>\u00a0from the prior quarter, to an annual rate of $13.3 trillion in \u201cchained 2012 dollars\u201d (to adjust for inflation), a tad below the peak in Q4 2019.<\/p>\n

This jump was powered by the $600 stimmies that went out in late December and the first waves of the $1,400 stimmies that went out in the latter part of March. In Q1, consumer spending accounted for 69.7% of GDP:<\/p>\n

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\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

Inflation Jumped by 3.8% in Q1, \u201cReal GDP\u201d Rose 1.6%, Dragged Down by Record Trade Deficit and Drop in Inventories Even the Fed\u2019s repressed inflation measure without food and energy rose 2.3% annual rate in Q1. The US economy, as measured by inflation-adjusted GDP, grew by 1.6% in the first quarter from Q4 2020, according […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[353,426,13343,806,827,4254,4255],"class_list":["post-57632","post","type-post","status-publish","format-standard","hentry","category-economics","tag-gdp","tag-inflation","tag-inventories","tag-trade-deficit","tag-united-states","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57632","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=57632"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57632\/revisions"}],"predecessor-version":[{"id":57633,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57632\/revisions\/57633"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=57632"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=57632"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=57632"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}