After some time to paw through the GDP numbers there are a few things that give me some pause.
Inventories added nearly 0.6 percentage points to GDP and the huge jump in corporate profits is only good news if it’s followed with better business investment (investment was high but revised lower). Some of this type of growth will take away from Q3 so it’s not all roses but at this point the market is focused on the taper and 2.5% growth is easily enough to pull the trigger.
The US dollar is at the highs of the day, right across the board. USD/JPY was especially quick off the finish line and that points to a continued easy move upward.
The WSJ has some more takeaways here. They point out that higher corporate profits have been directed to dividends, not investment and that isn’t a great sign. They also note the drag from government spending.