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| IAccording to the Commerce Department, the first look at GDP for Q2 showed that the U.S. economy contracted by -32.9% on an annualized basis. Personal consumption, which accounts for roughly two-thirds of all activity, fell by -25.05%, with services accounting for nearly all of that print. Prices for domestic purchases are an inflation indicator, and those fell by -1.5% vs. a +1.4% increase in Q1. The personal consumption expenditures price index fell by -1.9% vs. the +1.3% in Q1, and when looking at the core, which excludes food and energy, PCE prices were down -1.1%. Back on the headline total, we see a -5.38% drop in fixed investment, a -3.98% drop in private inventories, -9.38% decline in exports, a +10.06% from imports, and +.82% from government spending investment. Finally, personal income was much higher; however, that was in large part due to the government payments associated with the Covid-19 pandemic. Overall, a dismal report, just slightly better than expectations, but nonetheless, a number that will take some time to reverse. As it stands now, a rebound of good proportion is expected for Q3, but that will most likely depend on the future economic impact of the virus. |
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