Here's the bright spot in that disappointing GDP report

The bright spot in that disappointing GDP revision? Gross domestic income.

Gross domestic income, or GDI, measures "the value of the production of goods and services in the United States as the costs incurred and the incomes earned in production," according to the BEA.

Basically, GDI is everything that happens in the US economy, including wages, production costs, and taxes. And so while in theory GDI should equal GDP, they don't add up because these measures don't use exactly the same data.

On Friday, we learned that at an annualized rate, GDP fell 0.7% to start the year. GDI, by contrast, rose 1.4%.

In its release, the BEA says, "For a given quarter, the estimates of GDP and GDI may differ for a variety of reasons, including the incorporation of largely independent source data. However, over longer time spans, the estimates of GDP and GDI tend to follow similar patterns of change."

And so keeping this in mind, here's a look at real GDI compared to the prior year.

FRED

Compared to last year, real GDI rose 3.6% in Q1 while real GDP rose 2.7%.

In a note to clients following the report, Paul Ashworth at Capital Economics said, "Most tellingly, real gross domestic income, which measures activity by aggregating income rather than spending, suggests that the economy expanded by 1.4% annualised in the first quarter. We would view that as a much more accurate gauge of the economy's true performance over the three months of this year."

Following Friday's report, Jason Furman, Chairman of the White House's Council of Economic Advisors, also highlighted the GDI data, and said that looking at an average of the GDI and GDP numbers, the economy grew 0.3% to start the year.

Not great, but not as bad.

Furman also noted that starting in July, the BEA will report this average, which some economists argue is a more stable gauge of economic activity.

Ahead of Friday's report, Deutsche Bank's Joe LaVorgna said, "Since the GDI figures are based on hard tax data, they may be a better gauge of the fundamental health of the economy than GDP." And on Friday, GDI was far better than GDP.

So that's one way to look at it.

FRED