Q2 GDP Commentary from MBA's Mike Fratantoni

The following is MBA SVP and Chief Economist Mike Fratantoni’s reaction to this morning’s U.S. Commerce Department report on Q2 GDP:

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“The economy grew at a solid pace in the second quarter, supported by steady growth in consumer spending – clearly a reflection of the ongoing strength in the job market. However, the sharp drop in exports shows that this growth in the context of a weak global economy is creating a headwind for the economy along with the negative impact from restrictive monetary policy.

“Although growth was slightly above expectations in the second quarter, inflation as measured by the PCE deflator in this report slowed to a 2.6% rate, another welcome sign of disinflation, but this is still above the Fed’s 2% target.

“New home construction is set to increase in the quarters ahead, but the weakness in the existing home market, which is much larger, means the housing sector as a whole is still subtracting from rather than contributing to overall growth.”