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LCDR Tedeschi, Chief of Economics, US Space Force
Real GDP growth accelerated 1.9 percentage points between Q2 and Q1 (4.1% growth versus 2.2% growth). Most of that acceleration was due to consumption and exports. Nonresidential investment actually **decelerated**.
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LCDR Tedeschi, Chief of Economics, US Space Force Jul 27
Replying to @ernietedeschi
In other words, the structural story of the tax cuts -- firmer investment growth -- didn't happen this quarter.
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BLoLockChain⭐️⭐️ Jul 27
wrong .... Real GDP accelerated 0,45 percentage points between Q1 and Q2
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🥜 Peanuts 🥜 Jul 27
Replying to @ernietedeschi
Won't this cause US trade deficit to rise?
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large richard stamina Jul 27
Replying to @ernietedeschi
Imagine my surprise
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LCDR Tedeschi, Chief of Economics, US Space Force Jul 27
Replying to @ernietedeschi
Note too that in the end, the tariffs didn't juke the topline stats as much as expected: the one-time boost to GDP from export acceleration was more than washed out by the headwinds from inventory reduction.
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Allan Renz Jul 27
Replying to @ernietedeschi
Could the exports have been accelerated because of pending tariffs?
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LCDR Tedeschi, Chief of Economics, US Space Force Jul 27
Replying to @allanrenz
Almost certainly! But it looks like what happened is, rather than ramp up production before the tariffs hit, firms fell over themselves to export inventories they already had in stock. So in the end, the tariffs didn't have much of a net impact on the topline number.
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Allan Renz Jul 27
Replying to @ernietedeschi
Thanks for replying. Going forward? Can we maintain?
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Warren Platts Jul 27
Replying to @ernietedeschi
Well, it means they were exporting inventory. Those inventories will have to be replenished at some point.
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LCDR Tedeschi, Chief of Economics, US Space Force Jul 27
Replying to @ernietedeschi
In other words, one story that fits the data is that firms didn't ramp up new production in anticipation of the tariffs, they just rushed to export their existing inventories. Doing this has a net impact on GDP of zero from an accounting standpoint.
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Brian Jul 27
Replying to @ernietedeschi
Is a logical conclusion of the "PCE" columns rising vs the Inventories falling that there will be a rise in consumer goods and services? Tariffs would have an impact here as well, since it will be more expensive to buy goods from elsewhere, right?
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Joe Johnson Jul 27
Replying to @ernietedeschi
Can't wait for rate increases based on smoke and mirror "growth".
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Warren Platts Jul 27
That, and world prices are being driven down, boosting demanded quantities. With soybean prices down 20%, other customers besides China are scooping it up on the cheap.
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Warren Platts Jul 27
If net exports are up, that means the trade deficit will shrink slightly.
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Brian Jul 27
Replying to @ernietedeschi
'a rise in prices of consumer goods' is what I meant...omitted 'prices'
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KMS Jul 27
Replying to @ernietedeschi
Inventories might come in higher in subsequent q2 revisions. Which will only make the likely drop from the q2 to q3 number all that much larger. Q3 might be really ugly.
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Neoliberal Sellout Jul 27
Replying to @ernietedeschi
Energy continues to be the main driver from within. I’m sure the tax law helps the sector but most of that capex was gonna happen regardless
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Ryan Collins Jul 27
Replying to @ernietedeschi
What’s driving consumption? Didn’t I see a stat this week that consumer confidence was down?
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LCDR Tedeschi, Chief of Economics, US Space Force Jul 27
Replying to @ernietedeschi
Also, motor vehicle purchases alone contributed 0.55pp to that 1.9pp Q1-Q2 acceleration. Wonder if part of that was also a rush to beat the tariffs.
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