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Date: Bureau of Economic Analysis; Chart: Axios Visuals

U.S. GDP grew at a 6.5% annualized rate during the second quarter, a pace that fell short of some economists' expectations. But a closer look at the numbers suggests the report was far from disappointing.

Why it matters: If the shortfall in GDP growth were due to a shortfall in demand, then there would be concerns the economy could be peaking.

  • However, shrinking inventories weighed heavily on the metric, suggesting lack of goods prevented higher levels of growth.

By the numbers: Real business inventories fell at a $166 billion annual rate in Q2, shaving 1.1 percentage points off of GDP growth during the quarter.

What they’re saying: “Supply chain constraints and shortages are a substantial part of the drawdown in inventories,” High Frequency Economics’ chief U.S. economist Rubeela Farooqi tells Axios.

Yes, but: “The drag from inventories means that businesses have to rebuild stock, which will be a positive for growth,” Farooqi says.

The bottom line: The word “disappointment” has been thrown around a lot lately with little context. More often than not, shortfalls have been due to lack of supply available for a very healthy customer.

  • Also, 6.5% GDP growth is a blistering pace for a $19.4 trillion economy, which by the way is bigger now than it was before the pandemic.
  • “Businesses cannot get the parts and products they need to meet this tremendous moment of demand,” Wells Fargo senior economist Sarah House tells Axios. “But what hurts GDP today will be a help in coming quarters, as a much-needed rebuilding of inventories will mitigate the inevitable slowdown in spending.”

Go deeper

U.S. retail sales beat expectations for second month in a row

Data: FRED; Chart: Axios Visuals

The strength of retail sales data has shocked prognosticators for the second month in a row.

What’s new: Although September spending was lower than the peaks reached in the post-vax, pre-Delta variant honeymoon economy of the spring, consumers still spent more defiantly than economists had expected.

Report: U.S. Latinos near 50% homeownership rate

Real estate broker Alex Betances sits in front of a home in Reading, Pa. Photo: Ryan McFadden/MediaNews Group/Reading Eagle via Getty Image

Latinos increased their homeownership rate to nearly 50% in 2020, according to a report from a group monitoring U.S. Hispanic wealth creation.

Why it matters: The Hispanic Wealth Project found that the homeownership rate grew despite the lack of diversified financial assets among Latinos and around 15% who still live below the federal poverty line ($26,500 for a family of four).

Updated 9 mins ago - World

Mapping repression in China's Xinjiang region

Data: © Mapbox, © OpenStreetMap; Map: Will Chase/Axios

A sweeping new report released today by an Australian research organization reveals new details about how the Chinese Communist Party — and specifically who within the party — is carrying out its campaign of repression in Xinjiang.

Why it matters: Uncovering the actual offices and individuals implementing the Chinese government's genocide and forced labor policies in Xinjiang can bring accountability and help international companies delink supply chains in compliance with U.S. and EU forced labor laws.