Some media outlets pounced on economic growth in the second quarter because it was slower than the first quarter, but a MarketWatch columnist called it a “head fake” and not an indication of a “slump.”
Columnist Rex Nutting wrote, “Contrary to what you may read elsewhere, the U.S. economy did not slump in the second quarter of the year.” Growth was a “soft” 2.1 percent after a first quarter rate of 3.1 percent, but in his view not as bad as some represented it to be.
He called the good news “hidden,” pointing out “much of the slowdown” came from reduction of inventory.
He argued business reduction of inventory should be viewed positively — since “Fewer inventories now mean fewer layoffs later when sales moderate. Too many recessions have resulted from an overbuild of inventories.
Final sales were also strong and “rose at a 3.5% annual pace in the spring, the best growth in a year,” Nutting observed.
CNBC.com finance editor Jeff Cox also defended the latest GDP report noting the lower GDP, but acknowledging it beat Wall Street estimates.
“[U]nderlying numbers in the report seemed to take steam out of the recession fears that have been much of the talk among economists and policymakers at the Federal Reserve,” Cox added.