ILCB - Business Or Inflation Cycle?

• The BEA calculated a headline quarterly change which was substantially less than anticipated. The continuously compounded annual growth rate from Q1 to Q2 2021 was just 6.3%, compared to 6.1% Q4 to Q1.
• Primarily, US consumers and goods are clear outliers compared to what’s going on in the rest of the world. Outside the US goods economy, things really aren’t going as well.
• Services made a jump in Q2 - reopening more completely - yet spending in this area, still the majority of PCE, remained more than 3% below what it had been during the final quarter of 2019. A stark contrast to goods spending, to be sure.
• Giventhe massive demand/supply imbalance all over the consumer buying binge, youhave to wonder how these inflation figures weren’t higher. And that answer is,again, outside of goods, where it isn’t nearly the same kind of imbalancebetween demand and whatever supply.

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