Today’s GDP data show that growth in the second quarter of 2014 was better than the disastrous first quarter, but they don’t provide much to get excited about. Nearly half of the growth for the second quarter came from inventories piling up, which is not a reliable sign that the economy is going to grow faster going forward. Essentially, we made up some of the ground lost in the first three months of this year, but there’s nothing in today’s data to indicate that the economy is growing more strongly than it has for the past couple of years. These soft growth numbers, combined with continuing tame inflation, should convince the Fed not to tighten anytime soon.
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