Join Gary Stringer in the brief video as he reviews why the GDP measure of growth understates U.S. economic strength.
Despite Q1 2024 GDP estimates showing a 1.6% annualized growth, U.S. economic growth is stronger than these numbers suggest. – The discrepancy is due to how GDP is calculated, with imports detracting from GDP and exports contributing positively. – Both Q1 2022 and Q1 2024 were affected by net trade, with imports outweighing exports. – Increased imports in Q1 2022 were due to eased supply chain bottlenecks, particularly at the Ports of Long Beach and Los Angeles. – While both imports and exports grew in Q1, imports grew faster due to the relatively stronger U.S. economy compared to other major economies.
Real final sales to private domestic purchasers, which exclude the effects of foreign trade and changes in inventories, offer a clearer picture of U.S. economic growth. – In Q1, real final sales to private domestic purchasers grew at a more robust 3.1% annualized rate compared to the 1.6% real GDP growth. – Additional data beyond real GDP growth is necessary to understand trends accurately, and current trends reflect robust U.S. economic growth.
For more news, information, and analysis, visit the ETF Strategist Channel.
