Economic Front: It’s hard to tell where you’re going if you don’t know where you are...

The US Real Gross Domestic Product declined at a 1.6% annual rate in the fi rst quarter of 2022. Real Gross Domestic Income rose at a 1.8% rate. Over the last six quarters, GDP has grown at a 4.1% rate versus 7.3% for GDI (see line graph below). In theory, the two measures of economic activity should be identical; they diff er only by a “Statistical Discrepancy.” In reality, the measures diff er, but subsequent data revisions tend to reduce the difference between them. As data are revised over the next few years, I expect GDP growth to be revised up, GDI growth to be revised down, or some of both. Strong growth in payroll employment and industrial production in the fi rst quarter suggests a bigger (upward) revision to GDP. Retailer reports suggest that may happen through higher inventories.

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