Real GDP rose substantially less than expected in Q2, growing 6.5% versus a forecast 8.4%. Part of this was down to higher than forecast inflation, with the deflator rising 6% (annualized) on the quarter versus 5.4% forecast. The good news is that consumer spending was stronger than forecast at 11.8%. A lot of the miss seems to have come from government spending, which provided a drag on growth rather than the expected boost. Residential investment, inventories, and net exports also dragged on growth. As such, the data doesn’t look quite as bad as the headline whiff would suggest. Underlying private domestic demand still looks pretty solid. Meanwhile, benchmark revisions nudged the estimated size of the economy slightly lower.Elsewhere, initial claims were a bit worse than expected at 400k, again suggesting a stagnation in the labor market...though apparently not for a lack of job openings.