This GDP Measure Warns That The US Is Heading For A Recession

Earlier this month, we learned that GDP growth spiked to 3.6% at an annualized pace in Q3.

However, this was largely driven by a spike in inventories, which added a whopping 1.7 percentage points to the headline growth number.

Inventory gives and eventually inventory adjustments taketh away from GDP. This is why economists often emphasise real final sales, the GDP growth metric that excludes inventory.

During the period, real final sales growth slipped to just 1.9% from 2.1% in Q2.

This is not a good sign according to Bloomberg Briefs economist Rich Yamarone.

“When the year-over-year change in the level of real final sales falls below 2.0%, the economy eventually slips into recession,” he said to Business Insider.

This is such a concern that Yamarone told Business Insider that this was the most important chart of the year.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at