Inventories had been expected to be a weak component (if not negative) for Q1 GDP … but this is very strong

Comes in at +0.7% q/q

  • expected 0.0%, prior +0.2% q/q

OK, from a GDP perspective, data due on Wednesday, this is a big, big positive. Its a simple arithmetic thing.

+0.7 adds 0.7 points to the GDP. Simple.

There is no caveat for the GDP data … but for the outlook ahead there may well be, K?

'Inventory' can be a two-edge sword.

  • If the inventory build is business building stock ahead of expected increased demand its a positive for the economic outlook.
  • If, however, the inventory build is because demand has fallen and business is stockpiling their product, its not so positive.

I'll have more to come on this.

But, a word of … warning is not the correct word …. ummm a word on being self-aware. If your immediate, uncritical response to seeing an inventory build is to assume its a bad thing (I highlight this because people tend to have a big bias to focus on the bad, but an immediate uncritical focus on the positive is just as harming) then check out your biases, OK?

For background on this unpredictable data point, check out the previews here: