Second quarter real GDP in the U.S. grew at 6.5% on an annualized basis, lower than consensus estimates.
Steve Hanke, professor of Applied Economics at Johns Hopkins University, told David Lin, anchor for Kitco News, that market participants are not accurately factoring in inflation growth.
“It is lower than the consensus number and my take is that it would be a bit lower than the consensus. I wasn’t surprised by that, but you have to put it in context” he said. “6.5% is about three times higher than the normal potential growth rate of the U.S. economy, which is more or less, back of the envelope, around 2%. So, the real economy is hot. 6.5% is a hot number.”
Hanke said that inflation is likely to persist upwards and reach 9% by year-end.
For more information on the bond market and Hanke’s outlook on the gold price, watch the video above. Follow David Lin on Twitter: @davidlin_TV (https://twitter.com/davidlin_TV).