Solid Growth Driven by Consumers

In hindsight, hints that real gross domestic product would grow below projections were brewing based on recent inflation reports. After all, the “real” in real GDP implies that nominal output is deflated by the rate of inflation. Last week, the Bureau of Economic Analysis reported second-quarter growth of 6.5% on a seasonally adjusted annualized rate — roughly 200 basis points below the consensus estimate. Meanwhile, the GDP deflator measuring changes in prices for all goods and services came in at 6.1% in the quarter, indicating an acceleration of price increases over the quarter.

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