We much prefer this measure over real GDP because it removes the abrupt inventory swings from quarter to quarter, which can have outsized impacts on the headline number. Thus, during the first two quarters of 2022 the reported back-to-back real GDP contraction was owing to inventory liquidation, not an actual shrinkage of current activity.

As it happens, however, inventory swings cut both ways—so the chart below removes this statistical noise and gets to the underlying trend of production, income and spending.

What has happened, therefore, is that despite upwards of $11 trillion of monetary and fiscal stimmies since Q4 2019, the US economy has lurched along a path to essentially nowhere.

The original Lockdown-induced 32% annualized plunge in Q2 2020 was followed by a 23% annualized rebound in Q3 2020 and then a return to the pre-Covid starting point by Q1/Q2 2021. Thereafter, however, this aggregate indicator of current economic activity has essentially oscillated along the flat line.