The GDP surprise

The GDP surprise

Time to read: Minutes
Jon Dibble

Jon Dibble, CFA

Portfolio Specialist, Global Perspectives

Real GDP came in at –0.9% yesterday,* surprising consensus estimates which hovered in the low positive single digits. Among the biggest contributing factors were decreases in manufacturing inventories, private investment and government purchases. This marks the second consecutive quarter of negative growth, which by traditional definition means the United States has officially entered a recession. Regardless, companies continue to find ways to post profits. The S&P 500 index reported earnings of approximately 11% last quarter, nearly doubling expectations of roughly 6%. The second quarter also marks the sixth consecutive quarter of positive corporate earnings growth. Employment remains incredibly strong ― the strongest since February 2020 ― and consumers continue to spend. Though inflation still runs hot, it takes time for the Federal Reserve’s tightening polices to be felt and they’ve been successful at managing inflation in the past. GDP may be flat at the moment but we remain confident looking forward, as we see nothing fundamentally broken with the economy or the markets.


*Source: “Gross Domestic Product (Advance Estimate), Second Quarter 2022,” U.S. Bureau of Economic Analysis, July 28, 2022.


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