Real GDI Shows the Economy Continued to Plow Ahead in Q1-2022


  • Revised data showed that real GDP contracted at an annualized rate of 1.5% in Q1-2022, which represents a slight downward revision from the -1.4% rate that was reported a month ago.
  • Two volatile spending components (i.e., inventories and net exports) were largely responsible for the contraction in real GDP.
  • The first look at real gross domestic income showed that GDI grew 2.1% in the first quarter, which is more in line with the solid growth in the “core” parts of the spending components that occurred in Q1.
  • Corporate profits, which account for roughly 8% or so of gross domestic income, slid 2.3% (not annualized) in the first quarter. The profits that are reported in the national income and products accounts are roughly equivalent to operating earnings. But the decline in NIPA profits in Q1 is consistent with the weakness in reported profits that many S&P 500 companies have announced.
  • Our measure of profit margins show some compression in the first quarter. This compression in margins reflects the cost pressures that many companies are facing at present.