Thursday morning was the “third time’s the charm” for the federal government’s number-crunchers — the Bureau of Economic Analysis issued its third estimate of gross domestic product for the first quarter of the year.

It’s an important number for the Federal Reserve in its role as economic ground control, trying to bring inflation down to earth without crash-landing the economy. The Fed particularly wants to know how GDP is changing and how much growth is slowing. 

The answer? Pretty substantially. GDP growth fell from 3.4% in the last quarter of 2023 to 1.4% at the beginning of this year.

Fed Chair Jerome Powell said he would be looking even more closely at another number in today’s report. At his press conference after the June interest rate setting meeting, Powell said he’s paying particular attention to one slice of GDP: private domestic final purchases, which he said “usually sends a clearer signal on underlying demand.”

So, what is this “final sales” GDP data, and why does it matter so much right now? GDP is the broadest measure of goods and services produced in the U.S. economy. It includes pretty much everything. However, the Fed needs to get a sense of the specific level of demand from U.S. businesses and consumers for goods and services, according to Kathy Bostjancic at Nationwide.

“They will prioritize the core readings, and one of the cores is final sales to private domestic purchasers,” Bostjancic said. “Essentially, GDP — less exports, plus imports, less inventory investment.”

That’s the one Fed Chair Powell is all set on right now.

“By removing that net export component, you’re getting the purchases that are happening here in the United States, regardless of where they are produced,” said Dave Wasshausen with the Bureau of Economic Analysis, which produces the GDP report.

Final sales also strip out businesses buying up inventory and sticking it in warehouses to sell later, said Mark Zandi at Moody’s Analytics.

“Inventory changes, which go up, down, all around, but don’t get to the underlying growth rate in the economy,” Zandi said.

Notably, this only counts sales in the private sector. Government spending is excluded too, because it tends to be more stable over time and can obscure cyclical changes in the economy. 

So, right now, what is this Jay-Powell-approved GDP measure telling us? 

Well, final sales growth fell from 3.3% at the end of last year to 2.6% early this year. Ask two economists what that means … you get at least two answers. 

Bostjancic at Nationwide:

“That’s still a really strong result for the core GDP. It shows that consumers continue to spend and also businesses are still investing,” Bostjancic said.

And Zandi at Moody’s:

“The economy, no matter how you measure it, is slowing,” said Zandi, adding the second quarter, which is about to end, looks to be slowing even more.