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GDP Falls at a 0.9 Percent Rate, Driven by Slower Inventory Growth and Falling Housing Construction

Recession-fearing households increased spending on hotels and restaurants at a 13.5 percent annual rate in Q2.
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Recession-fearing households increased spending on hotels and restaurants at a 13.5 percent annual rate in Q2.

GDP declined at a 0.9 percent annual rate in the second quarter, as a slower pace of inventory accumulation subtracted 2.01 percentage points from the quarter’s growth. A 14.0 percent rate of decline in residential construction subtracted 0.71 percentage points from GDP growth. Final sales of domestic products to domestic purchasers fell at a 0.3 percent rate, after rising at a 2.0 percent rate in the first quarter.

Even with Slower Growth, Inventories Still Accumulated at a Healthy Pace

Inventories still rose at a $81.6 billion annual rate, somewhat faster than pre-pandemic normal. This was nonetheless a drag on growth, since they grew at a $188.5 billion rate in the first quarter. This healthy rate of accumulation is a positive going forward, since it means stores are, for the most part, well-stocked after the pandemic supply chain problems. This will put downward pressure on prices.

Farm inventories are an exception. They fell at a $44.6 billion annual rate, continuing a downward trend that has been in place since the third quarter of 2015.

Consumption Grew at a Modest 1.0 Percent Rate, as the Switch Back to Services Continues

Consumption of services rose at a 4.1 percent annual rate in the second quarter, while consumption of goods fell at a 4.4 percent rate. Goods consumption as a share of nominal spending is still 3.6 percent higher than its pre-pandemic share, with service spending down by the same amount. The goods share in real terms is 3.2 percentage points higher, with services down by 2.4 percentage points (real shares won’t sum to 100 percent).

Spending on a wide range of goods is still considerably higher than its pre-pandemic level. The biggest drop in nominal shares on the service side are in health care services, down 1.4 percentage points, recreational services down 0.6 percentage points, housing down 0.5 percentage points, and transportation services (much of this is commuting) down 0.4 percentage points.

The Saving Rate is Holding Up

The inflation hawks have been raising the alarm that people are spending down pandemic savings, leading to an overheated economy. They cite the reported saving rate, which was 5.2 percent in the second quarter, down from an average 7.5 percent in the three years preceding the pandemic.

This is misleading. Saving was lower in the last two quarters because tax payments have risen. Since there was not an increase in tax rates in 2022, this is presumably because people are paying capital gains taxes on recent stock sales.

The sum of savings plus taxes as a share of personal income was 18.9 percent in the second quarter. This is higher than the 18.5 percent figure in 2018 and the 18.7 percent share in 2019.

In short, there is no story of excessive levels of consumption overheating the economy. On the other side, hotel and restaurant spending rose at a 13.5 percent annual rate in the second quarter. This is not consistent with the widely expressed recession fears reported by the media.

Inflation Slows Sharply in Quarter

Inflation, as measured by the core Personal Consumption Expenditures (PCE) deflator (the Fed’s main inflation gauge), fell to a 4.4 percent annual rate in the second quarter from a 5.2 percent rate in the first quarter. This is still considerably higher than the Fed’s target of a 2.0 percent average rate, but it should help to alleviate concerns of a 1970s-type wage-price spiral. While it is just a single quarter’s data — and these numbers have been especially erratic in the pandemic — the pace of inflation looks to be slowing rather than increasing.

Investment Remains Healthy

Nonresidential investment fell at a 0.1 percent annual rate in the quarter, driven mostly by an 11.7 percent rate of decline in structure investment. Structure investment has been falling sharply throughout the pandemic and recovery as there is less need for office space and traditional retail space. It was 24.7 percent below its pre-pandemic level in the second quarter.

Investment in intellectual products remains solid, rising at 9.2 percent rate in the quarter, putting it 20.0 percent above its level in the fourth quarter of 2019. Equipment investment fell at a 2.7 percent rate, but is still 9.0 percent higher than in the fourth quarter of 2019.

Residential Investment Falls Sharply

The drop in housing was largely expected and pretty much what the Fed presumably wanted to see as a result of its interest rate hikes. The sharp rise in mortgage interest rates took the air out of an incipient housing bubble, with sales falling sharply.

The higher rates have also led to a drop in construction, which is unfortunate since the country needs more housing. However, residential construction was still 9.9 percent above its pre-pandemic level in the quarter. It is also important to remember that fees associated with mortgage issuance are included in this category of spending. Mortgage refinancing has largely disappeared in the last two months, with applications down close to 80 percent from year-ago levels.

Slowing Nondefense Federal Spending is Drag on Quarter’s Growth

Nondefense federal spending fell at a 10.5 percent annual rate in the second quarter, slowing the quarter’s growth by 0.3 percentage points. State and local government spending also declined at a 1.2 percent rate, knocking 0.13 percentage points off growth.

Net Exports Were a Big Boost to Growth in the Quarter

An 18.0 percent rise in exports, coupled with a much slower 3.1 percent rise in imports, caused trade to add 1.43 percentage points to second quarter growth. We are not likely to see similar gains in future quarters, as weaker growth in our trading partners is likely to diminish demand for US exports.

On the Whole, This is a Positive Report

The modest drop in GDP reported for the quarter is not good news, but it was hardly a surprise. It also was entirely due to inventory quirks, which will not be repeated in future quarters. Consumption is still growing at a respectable pace, as is investment. 

The Fed has been raising interest rates ostensibly out of concern that the economy was growing too fast, causing inflation. This report should help to stem those fears. While people are apparently not so concerned about a recession to keep themselves from taking trips and going to restaurants, they are still not spending down their pandemic savings. The sharp drop in the inflation rate reported in the core PCE deflator should also alleviate concerns about a wage-price spiral.

CEPR produces same-day analyses of government data on inflation, employment, GDP and other topics. Follow @DeanBaker13 on Twitter to get his quick-take analysis of government data immediately upon release.

The post GDP Falls at a 0.9 Percent Rate, Driven by Slower Inventory Growth and Falling Housing Construction appeared first on Center for Economic and Policy Research.

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Pharma industry reputation remains steady at a ‘new normal’ after Covid, Harris Poll finds

The pharma industry is hanging on to reputation gains notched during the Covid-19 pandemic. Positive perception of the pharma industry is steady at 45%…

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The pharma industry is hanging on to reputation gains notched during the Covid-19 pandemic. Positive perception of the pharma industry is steady at 45% of US respondents in 2023, according to the latest Harris Poll data. That’s exactly the same as the previous year.

Pharma’s highest point was in February 2021 — as Covid vaccines began to roll out — with a 62% positive US perception, and helping the industry land at an average 55% positive sentiment at the end of the year in Harris’ 2021 annual assessment of industries. The pharma industry’s reputation hit its most recent low at 32% in 2019, but it had hovered around 30% for more than a decade prior.

Rob Jekielek

“Pharma has sustained a lot of the gains, now basically one and half times higher than pre-Covid,” said Harris Poll managing director Rob Jekielek. “There is a question mark around how sustained it will be, but right now it feels like a new normal.”

The Harris survey spans 11 global markets and covers 13 industries. Pharma perception is even better abroad, with an average 58% of respondents notching favorable sentiments in 2023, just a slight slip from 60% in each of the two previous years.

Pharma’s solid global reputation puts it in the middle of the pack among international industries, ranking higher than government at 37% positive, insurance at 48%, financial services at 51% and health insurance at 52%. Pharma ranks just behind automotive (62%), manufacturing (63%) and consumer products (63%), although it lags behind leading industries like tech at 75% positive in the first spot, followed by grocery at 67%.

The bright spotlight on the pharma industry during Covid vaccine and drug development boosted its reputation, but Jekielek said there’s maybe an argument to be made that pharma is continuing to develop innovative drugs outside that spotlight.

“When you look at pharma reputation during Covid, you have clear sense of a very dynamic industry working very quickly and getting therapies and products to market. If you’re looking at things happening now, you could argue that pharma still probably doesn’t get enough credit for its advances, for example, in oncology treatments,” he said.

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Spread & Containment

I created a ‘cosy game’ – and learned how they can change players’ lives

Cosy, personal games, as I discovered, can change the lives of the people who make them and those who play them.

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Cosy games exploded in popularity during the pandemic. Takoyaki Tech/Shutterstock

The COVID pandemic transformed our lives in ways many of us are still experiencing, four years later. One of these changes was the significant uptake in gaming as a hobby, chief among them being “cosy games” like Animal Crossing: New Horizons (2020).

Players sought comfort in these wholesome virtual worlds, many of which allowed them to socialise from the safety of their homes. Cosy games, with their comforting atmospheres, absence of winning or losing, simple gameplay, and often heartwarming storylines provided a perfect entry point for a new hobby. They also offered predictability and certainty at a time when there wasn’t much to go around.

Cosy games are often made by small, independent developers. “Indie games” have long been evangelised as the purest form of game development – something anyone can do, given enough perseverance. This means they can provide an entry point for creators who hadn’t made games before, but were nevertheless interested in it, enabling a new array of diverse voices and stories to be heard.

In May 2020, near the start of the pandemic, the small poetry game A Solitary Spacecraft, which was about its developer’s experience of their first few months in lockdown, was lauded as particularly poignant. Such games showcase a potential angle for effective cosy game development: a personal one.

Personal themes are often explored through cosy games. For instance, Chicory and Venba (both released in 2023) tackle difficult topics like depression and immigration, despite their gorgeous aesthetics. This showcases the diversity of experiences on display within the medium.

However, as the world emerges from the pandemic’s shadow, the games industry is facing significant challenges. Economic downturns and acquisitions have caused large layoffs across the sector.

Historically, restructurings like these, or discontent with working conditions, have led talented laid-off developers to create their own companies and explore indie development. In the wake of the pandemic and the cosy game boom, these developers may have more personal stories to tell.

Making my own cosy game

I developed my own cosy and personal game during the pandemic and quickly discovered that creating these games in a post-lockdown landscape is no mean feat.

What We Take With Us (2023) merges reality and gameplay across various digital formats: a website, a Discord server that housed an online alternate reality game and a physical escape room. I created the game during the pandemic as a way to reflect on my journey through it, told through the videos of game character Ana Kirlitz.

The trailer for my game, What We Take With Us.

Players would follow in Ana’s footsteps by completing a series of ten tasks in their real-world space, all centred on improving wellbeing – something I and many others desperately needed during the pandemic.

But creating What We Take With Us was far from straightforward. There were pandemic hurdles like creating a physical space for an escape room amid social distancing guidelines. And, of course, the emotional difficulties of wrestling with my pandemic journey through the game’s narrative.

The release fared poorly, and the game only garnered a small player base – a problem emblematic of the modern games industry.

These struggles were starkly contrasted by the feedback I received from players who played the game, however.

This is a crucial lesson for indie developers: the creator’s journey and the player’s experience are often worlds apart. Cosy, personal games, as I discovered, can change the lives of those who play them, no matter how few they reach. They can fundamentally change the way we think about games, allow us to reconnect with old friends, or even inspire us to change careers – all real player stories.

Lessons in cosy game development

I learned so much about how cosy game development can be made more sustainable for creators navigating the precarious post-lockdown landscape. This is my advice for other creators.

First, collaboration is key. Even though many cosy or personal games (like Stardew Valley) are made by solo creators, having a team can help share the often emotional load. Making games can be taxing, so practising self-care and establishing team-wide support protocols is crucial. Share your successes and failures with other developers and players. Fostering a supportive community is key to success in the indie game landscape.

Second, remember that your game, however personal, is a product – not a reflection of you or your team. Making this distinction will help you manage expectations and cope with feedback.

Third, while deeply considering your audience may seem antithetical to personal projects, your game will ultimately be played by others. Understanding them will help you make better games.

The pandemic reignited the interest in cosy games, but subsequent industry-wide troubles may change games, and the way we make them, forever. Understanding how we make game creation more sustainable in a post-lockdown, post-layoff world is critical for developers and players alike.

For developers, it’s a reminder that their stories, no matter how harrowing, can still meaningfully connect with people. For players, it’s an invitation to embrace the potential for games to tell such stories, fostering empathy and understanding in a world that greatly needs it.


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Adam Jerrett does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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The SNF Institute for Global Infectious Disease Research announces new advisory board

From identifying the influenza virus that caused the pandemic of 1918 to developing vaccines against pneumococcal pneumonia and bacterial meningitis in…

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From identifying the influenza virus that caused the pandemic of 1918 to developing vaccines against pneumococcal pneumonia and bacterial meningitis in the 1970s, combating infectious disease has a rich history at Rockefeller. That tradition continues as the Stavros Niarchos Foundation Institute for Global Infectious Disease Research at Rockefeller University (SNFiRU) caps a successful first year with the establishment of a new advisory board.

Credit: Lori Chertoff/The Rockefeller University

From identifying the influenza virus that caused the pandemic of 1918 to developing vaccines against pneumococcal pneumonia and bacterial meningitis in the 1970s, combating infectious disease has a rich history at Rockefeller. That tradition continues as the Stavros Niarchos Foundation Institute for Global Infectious Disease Research at Rockefeller University (SNFiRU) caps a successful first year with the establishment of a new advisory board.

This international advisory board was created in part to give guidance on how to best use SNFiRU’s resources, as well as bring forward innovative ideas concerning new avenues of research, public education, community engagement, and partnership projects.

SNFiRU was established to strengthen readiness for and response to future health crises, building on the scientific advances and international collaborations forged in the context of the COVID-19 pandemic. Launched with a $75 million grant from the Stavros Niarchos Foundation (SNF) as part of its Global Health Initiative (GHI), the institute provides a framework for international scientific collaboration to foster research innovations and turn them into practical health benefits.

SNFiRU’s mission is to better understand the agents that cause infectious disease and to lower barriers to treatment and prevention globally. To speed this work, the institute launched numerous initiatives in its inaugural year. For instance, SNFiRU awarded 31 research projects in 29 different Rockefeller laboratories for over $5 million to help get collaborative new research efforts off the ground. SNFiRU also supports the Rockefeller University Hospital, where clinical studies are conducted, and brought on board its first physician-scientist through Rockefeller’s Clinical Scholars program. “One of the surprises was the scope of interest from Rockefeller scientists in using their talents to tackle important infectious disease problems,” says Charles M. Rice, Maurice R. and Corinne P. Greenberg Professor in Virology at Rockefeller and director of SNFiRU. “The research topics range from the biology of infectious agents to the dynamics of the immune response to pathogens, and also include a number of infectious disease-adjacent studies.”

In the past 12 months, SNFiRU often brought together scientists studying different aspects of infectious disease as a way to spur new collaborations. In addition to hosting its first annual day-long symposium, SNFiRU initiated a Young Scientist Forum for students and post-doctoral fellows to meet regularly, facilitating cross-laboratory thinking. A bimonthly seminar series has also been established on campus.

Another aim of SNFiRU is to develop relationships with community-based organizations, as well as design and participate in community-engaged research, with a focus on low-income and minority communities. To that end, SNFiRU is helping develop a research project on Chagas disease, a tropical parasitic infection prevalent in Latin America that can cause congestive heart failure and gastrointestinal complications if left untreated. The project will bring together clinicians practicing at health centers in New York, Florida, Texas, and California and basic scientists from multiple institutions to help the communities that are most impacted.

“The SNFiRU international advisory board convenes globally recognized leaders with distinguished biomedical expertise, unrivalled experience in pandemic preparedness and response, and a shared commitment to translating scientific advancements into equitably distributed benefits in real-world settings,” says SNF Co-President Andreas Dracopoulos. “The advisory board will advance the institute’s indispensable mission, which SNF is proud to support as a key part of our Global Health Initiative, and we look forward to seeing breakthroughs in the lab drive better outcomes in lives around the globe.”

The new advisory board will hold its first meeting on April 11th, 2024, following the second annual SNF Institute for Global Infectious Disease Research Symposium at Rockefeller.

Its members are: Rafi Ahmed of Emory University School of Medicine, Cori Bargmann of The Rockefeller University, Yasmin Belkaid of the Pasteur Institute, Anthony S. Fauci, the former director of the National Institute of Allergy and Infectious Diseases, Peter Hotez of Baylor College of Medicine and Texas Children’s Hospital Center for Vaccine Development, Esper Kallas of of the Butantan Institute, Sharon Lewin of the University of Melbourne Doherty Institue, Carl Nathan of Weill Cornell Medicine, Rino Rappuoli of Fondazione Biotecnopolo di Siena and University of Siena, and Herbert “Skip” Virgin of Washington University School of Medicine and UT Southwestern Medical Center.


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