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Economy in Brief
U.S. ADP Employment Increase Throttles Back
The ADP/Moody's National Employment Report indicated a 218,000 rise (2.2% y/y) in July nonfarm private sector jobs...
FOMC Sees Economic Rebound; Pares Back Bond Purchases Further
The Fed indicated that the economy, consumer spending, business investment and job creation each had improve...
EU Indices Take a Step Back in July as the EMU Reading Steps Up
The EU index of economic sentiment fell to 105.8 in July from 106.4 in June...
U.S. Consumer Confidence Improves to Highest Level Since October 2007
The Conference Board reported that their reading of consumer confidence improved 5.2% this month (12.2% y/y) to 90.9...
U.S. Gasoline Prices Return to March Low
The price for a gallon of regular gasoline declined another five cents last week to $3.54 (-2.9% y/y)...
U.S. Chain Store Sales Hold On To Earlier Gains
The International Council of Shopping Centers and Goldman Sachs reported that chain store sales nudged 0.2% higher last week...
by Tom Moeller July 30, 2014
The economic recovery returned to a firm footing last quarter. The advance GDP estimate indicated a 4.0% rate of growth during Q2. The gain follows a 2.1% Q1 decline, revised from -2.9% and depressed by weather, inventory & foreign trade effects. The gain was the strongest since Q3'13 and outpaced expectations for a 3.0% rise in the Action Economics Forecast Survey. Figures were revised back to 1999.
Consumers resumed spending at a 2.5% rate (2.3% y/y) following a subdued 1.2% rise. The gain was powered by a 14.0% jump (6.9% y/y) in spending on durable goods. Motor vehicles purchases rose 17.5% (7.4% y/y) while furniture spending jumped 13.1% (6.9% y/y). In the nondurable goods sector, apparel spending rose 6.9% (0.4% y/y) as it recovered from a Q1 decline. Services spending nudged 0.7% higher (1.7% y/y), the rise depressed by a sharp drop in spending on housing & utilities.
Business investment growth also improved to a 5.5% rate (5.7% y/y) after a modest 1.6% rise. Spending on equipment gained 7.0% (6.1% y/y) driven by a 21.4% surge (2.9% y/y) in information processing, while structures investment rose 5.3% (7.9% y/y). Residential investment recovered 7.5% (0.9% y/y) after a 5.3% decline. Government spending increased at a 1.6% rate (-0.7% y/y), the first positive result since two 0.2% upticks during the middle of last year. The latest rise was driven by a 3.1% gain (0.9% y/y) in state & local spending. Federal government outlays fell 0.7% (-3.2% y/y) due to a 3.7% drop (-2.6% y/y) in nondefense spending. Defense outlays rose 1.0% (-3.6% y/y) following two quarters of sharp decline.
A rebound in inventory investment added 1.7 percentage points to GDP growth following subtractions during the prior two quarters. Deterioration in the foreign trade deficit subtracted another 0.6 percentage points from growth. A 9.5% gain (3.5% y/y) in exports only recovered a Q1 decline and was outpaced by an 11.7% rise (3.9% y/y) in imports.
Price inflation picked up steam, reflected by a 2.0% rise (1.6% y/y) in the GDP price index, the strongest gain in roughly two years. The PCE price index rose 2.3% (1.6% y/y), the strongest gain in three years. Prices excluding food & energy rose a heightened 2.0% (1.5% y/y). The capital goods price index rose at a reduced 1.2% rate (1.3% y/y).
The latest GDP figures can be found in Haver's USECON and USNA databases; USNA contains basically all of the Bureau of Economic Analysis' detail in the national accounts, including the integrated economic accounts and the recently added GDP data for U.S. Territories. The Action Economics consensus estimates can be found in AS1REPNA.
|Chained 2009 $, %, AR||Q2'14 (Advance Estimate)||Q1'14||Q4'13||Q2 Y/Y||2013||2012||2011|
|Gross Domestic Product||4.0||-2.1||3.5||2.4||2.2||2.3||1.6|
|Foreign Trade Effect||-0.6||-1.7||1.1||-0.1||0.3||0.1||0.0|
|Domestic Final Sales||2.8||0.7||2.7||2.1||1.9||2.1||1.7|
|Personal Consumption Expenditures||2.5||1.2||3.7||2.3||2.4||1.8||2.3|
|Business Fixed Investment||5.5||1.6||10.4||5.7||3.0||7.2||7.7|
|Chain-Type Price Index|
|Personal Consumption Expenditures||2.3||1.4||1.0||1.6||1.2||1.8||2.5|