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Data from the BEA, chart by Mish

GDP vs GDI

• GDP and GDI are two measures of the same thing.
• GDI counts what all participants in the economy make, including wages, rental income, and corporate profits.
• GDP measures the value of the goods and services that the economy produces.
• Real means inflation-adjusted.

The gap between GDP and GDI is the biggest on record.

Real GDP, Real Final Sales, Real GDI 2024 Q2 Second Estimate

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Real final sales is the bottom line estimate of GDP.

The difference between GDP and Real final sales is change in private inventories (CIPI) that nets to zero over time.

Of the 3.0 percent rise in GDP, 0.8 percentage points is due to inventory evaluation.

Believe GDI

GDI is a more accurate albeit less timely measure of the economy. And given the huge negative revisions in jobs (thus wages), it is by far the more reasonable estimate of the economy.

August 2: Unemployment Rate Jumps, Jobs Rise Only 114,000 with More Negative Revisions

August 21: BLS Revises Jobs Down by 818,000 the Most Ever, About 68,000 Per Month

Regarding the -818,000 jobs revision, I expected some of that to hit first quarter revised estimates but that will not happen until next month per the BEA. “New QCEW data for the first quarter of 2024 will be incorporated in next month’s release along with the 2024 Annual Update of the National Economic Accounts.”

Meanwhile GDI is floundering at 1.3 percent (and soon to be revised lower) vs an alleged 3.0 percent for GDP.

Recession Has Started

I am sticking with this assessment: Improving the McKelvey Recession Indicator, No False Negative or Positive Signals

Since 1953, every time the economy was in the current state, the economy was in recession.

That does not make the odds 100 percent because everything is up to the NBER, the official arbiter of recessions.

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