Q2 Arguably The Weakest Quarter in Two Years

At a glance: a weak advance GDP number for Q2. Putting aside the question of technical recession, the details suggesting unsettling underlying dynamics and arguably the weakest quarter since Q2 2020 despite a modest uptick vs the prior quarter (-0.9% Q/Q annualized, vs -1.6% prior).

• Disappointing private consumption growth (goods consumption saw the biggest drop since Q3 2021 though services picked up)
• Biggest drop in residential investment, nonresidential structures, and equipment investment since Q2 2020.
• Inventories subtracted 2.0pp from the headline figure but this miss wasn't all about that.
• That's because underlying demand was also poor. Final sales to domestic purchasers went negative for first time since Q2 2020; to private domestic purchases flat (also worst figure since Q2 2020).
• A higher-than-forecast price deflator also of note (though core PCE in line).