Via Damien Boey at Credit Suisse:
2Q real GDP growth is looking like a negative print. Today, we received inventories data, which came in well below expectations, falling by 0.9% over the quarter, compared with expectations for an 0.3% gain. This compares with an 0.8% increase in 1Q. Note that it is the second derivative of inventories which matters for GDP growth (ie the change in the change). Therefore, the large and negative swing is a major drag on quarterly growth to the tune of -0.6%.
