Running to a meeting so more to come on this later in the day, but the strong bounceback in Q2 GDP to 4% confirms that the -2.1% (as revised) in Q1 was the outlier we all thought it was.
For now, my only point is this. Let us not flip from “we’re going down!” to “we’re overheating!” on the basis of what are clearly noisy data. I’ve already read too much commentary suggesting that this report, with its spike in both growth and prices relative to last quarter, is a shot over the Fed’s bow. (I should note that these same alarmists didn’t exactly call for a massive stimulus program last quarter, so there’s a bit of asymmetry to their alarmism…)
Instead, let’s take a clear-eyed look at the underlying pressures building, or not, in the economy, while remembering that we still have significant output gaps to close.