Latest / Markets with Megan: A Quick Financial Markets Update / Economic Trends Defy Predictions as GDP Edges Up | Episode 149 | 06-27-24

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Economic Trends Defy Predictions as GDP Edges Up | Episode 149 | 06-27-24 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: So we've gotten that third reading on first quarter GDP this morning.
• 0:04
  Megan Horneman: It is Thursday, June the 27th, and we typically get many different variations of the quarterly GDP report.
• 0:12
  Megan Horneman: This morning we got the third reading on this and what we saw was the actual number for GDP for the first quarter came in a little bit better than expected.
• 0:22
  Megan Horneman: The second reading was 1.3% and it actually came in at 1.4%.
• 0:27
  Megan Horneman: Some of the changes there were there was actually less spending on goods, less spending on services as well to some extent there was more CAPEX spending.
• 0:37
  Megan Horneman: It was less of a net export drag than they had originally reported in the second report and there was a bit more state and local government spending.
• 0:45
  Megan Horneman: Now, when we look into the details of this report from a personal consumption component remember that's the biggest part of GDP Personal consumption actually came in much lower than what they had originally put in the second reading.
• 1:02
  Megan Horneman: The expectation, or the estimate, was that personal consumption was up 2% for the quarter, but it actually was only up 1.5%.
• 1:10
  Megan Horneman: The other thing that we've been looking closely at is that inflation component of the GDP, your core PCE price index, and remember that this originally came out very hot.
• 1:21
  Megan Horneman: They did revise it down to 3.6% for the quarter, but actually now that got moved back up to 3.7% for the quarter.
• 1:29
  Megan Horneman: So mixed inflation reading here for the Fed weaker consumer.
• 1:33
  Megan Horneman: We've known that the consumer has been weak to start off in 2024.
• 1:38
  Megan Horneman: We're also seeing from the expectation for the second quarter GDP that from the 1.4% is actually going to rise 2% in the second quarter.
• 1:48
  Megan Horneman: We still think that is a little optimistic, especially since we've continued to see the weakness in the consumer.
• 1:55
  Megan Horneman: The housing data has been very weak.
• 1:57
  Megan Horneman: Manufacturing is still contracting.
• 1:59
  Megan Horneman: So the one thing that we'll be looking at is the CapEx numbers that we get for the month to try and get a better indication for second quarter GDP.
• 2:08
  Megan Horneman: That's all we have.
• 2:09
  Megan Horneman: We'll actually be back later this afternoon when we will get some information on the CapEx reading here for the month of May and then we'll be back tomorrow with the, the PCE indicator, which is the Fed's preferred inflation gauge.
• 2:21
  Megan Horneman: Thank you very much.