From John Herrmann, chief economist at Cantor Fitzgerald, comes this insight from a subscriber report (hence no link): “Some very creative accounting by the Administration pushed Q2 GDP growth up to +2.4%. Following Q1’s +1.4% GDP growth rate, GDP grew at a +2.4% rate in Q2 - we were looking for a minor gain in Q2’s real GDP growth rate to +1.4%; consensus forecast: +1.4%. Although the headline looks impressive, it really was not, as a 14% rise in defense spending in March was actually booked in April, inflating Q2’s Federal Government spending outlays to their largest Quarterly gain since the Korean War. Big deal, that is just good old-fashioned Texas accounting hard at work. Federal government spending jumped over 25.0% for the quarter, and the Federal deficit is well on its way to a new record size.”
The Commerce Department news release also indicates a -3.3% decline in national defense expenditures in Q1, and a 44.1% increase in Q2.
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