Q2 2016 GDP: +1.2%

Second-quarter GDP looks very weak at only a plus 1.2 percent annualized rate, but the details are positive. The biggest positive is consumer spending where growth, showing strength across readings, came in at a stellar 4.2 percent rate, more than double the first-quarter's 1.6 percent rate.

A plus for the economy but a big negative in this report is slowing inventory accumulation which pulled down GDP by 1.2 percentage points in the quarter. But lean inventories point ahead to new accumulation which is a plus for future production and employment. An unequivocal plus is strength in net exports which, reflecting the first gain in exports since the second quarter last year, rose at a 1.4 percent rate.

A negative in the report is a reversal in residential investment, which had been running in the double-digit zone but which fell at an annualized 6.1 percent to pull down GDP in the second quarter by 2 tenths. A central concern remains nonresidential fixed investment, falling at a 2.2 percent rate and pulling down GDP by 3 tenths in the quarter. Weakness here points to weakness in business confidence and trouble ahead for productivity growth.

Price data do show some pressure with the overall index, reflecting the oil rebound, at 2.2 percent year-on-year, up from a revised 0.5 percent in the first quarter, but the core rate showing a little less pressure at 2.0 percent for, however, a still sizable 5 tenths gain.

Another negative is a 3 tenths downward revision to first-quarter GDP, now at a very thin plus 0.8 percent. But today's report isn't as bad it looks underscored by final demand which came in 2.4 percent or double the first-quarter's rate. Low inventories are a plus for the third quarter as is the momentum underway in the economy's central strength, the consumer.