Global| Aug 31 2005US GDP Growth Little Revised, Profits Quite Firm
by:Tom Moeller
|in:Economy in Brief
Summary
2Q05 US real GDP growth was little revised at 3.3% (AR) as revisions to foreign trade and inventories roughly offset one another. Consensus expectations had been for 3.4% growth. Operating corporate profits rose a firm 6.1% (17.7%) [...]
2Q05 US real GDP growth was little revised at 3.3% (AR) as revisions to foreign trade and inventories roughly offset one another. Consensus expectations had been for 3.4% growth.
Operating corporate profits rose a firm 6.1% (17.7%) following a 5.6% gain during 1Q. The increase came despite a 2.2% decline (+9.1% y/y) in financial sector earnings and a modest 1.1% increase (10.6% y/y) increase in foreign earnings. US nonfinancial corporate sector earnings rose 11.9% (24.1% y/y), the strongest quarterly increase in three years.
The positive contribution to GDP growth from a shallower foreign trade deficit was lessened to 1.2 percentage points as import growth was revised to show a slight q/q increase rather than a 2.0% decline. Export growth was raised slightly to 13.2% (8.3% y/y).
The negative growth contribution from inventories was lessened and offset the trade revision, but the 2.0 percentage point drag still was the third in the last four quarters and was the largest since 2000. 
Growth in domestic demand was reduced to 3.9%. Business fixed investment growth was notched down a bit to 8.4% (AR, 9.1% y/y) from 9.0% and growth in real PCE similarly was lowered to 3.0% (3.8% y/y) from 3.3%. Residential building growth of 9.8% (5.8% y/y) was unrevised.
The chain price index was unrevised at 2.4% and the chain price index for domestic final demand was lowered slightly to 3.1% (2.8% y/y).
The minutes to the latest meeting of the FOMC can be found here.
| Chained 2000$, % AR | 2Q '05 (Prelim.) | 2Q '05 (Advance) | 1Q '05 | Y/Y | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|---|
| GDP | 3.3% | 3.4% | 3.8% | 3.6% | 4.2% | 2.7% | 1.6% |
| Inventory Effect | -2.0% | -2.3% | 0.3% | -1.4% | 0.3% | 0.0% | 0.4% |
| Final Sales | 5.4% | 5.8% | 3.5% | 4.2% | 3.9% | 2.7% | 1.2% |
| Foreign Trade Effect | 1.2% | 1.6% | -0.4% | 0.1% | -0.5% | -0.3% | -0.6% |
| Domestic Final Demand | 3.9% | 4.0% | 3.7% | 4.1% | 4.4% | 3.0% | 1.8% |
| Chained GDP Price Index | 2.4% | 2.4% | 3.1% | 2.4% | 2.6% | 2.0% | 1.7% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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