CIBC Research discusses its reaction to today's prelim US Q2 GDP print.
"Economic activity retreated further in the US in Q2, as inventories continued to be held back by supply chain issues, and higher interest rates weighed on activity. The 0.9% annualized drop in growth was below the consensus for a 0.4% increase, with inventories shaving 2%-points off of the quarter, reflecting a decrease in inventories at the retail level, including at car dealerships. Residential investment declined as higher mortgage rates thwarted demand, adding to a retrenchment in government spending, while business investment didn't provide any offset. That left exports and the consumption of services as the only positive contributors," CIBC notes.
"Over the remainder of the year, we look for an easing in supply chain issues to support inventory restocking, and a return to positive growth, but further out, the Fed is committed to capping the pace of growth," CIBC adds.