U.S. GDP Growth Is Unrevised; Price Gain Lowered in Q2

The third estimate of real GDP growth in the second quarter was unrevised at 2.1% (SAAR). That was down from the advance estimate of a 2.4% gain and followed a 2.2% first quarter rise. The Action Economics Forecast Survey expected a 2.3% gain. Weakened growth in consumer spending was offset by raised estimates of business & residential investment. Moderated GDP price inflation was unchanged. The estimate of Q2 corporate profits was raised slightly.

Real final sales to domestic purchasers grew 2.0% (1.8% y/y), revised from 2.3%, following a 3.8% rise. Personal consumption expenditures growth was revised down to 0.8% (1.8% y/y) from 1.7% as durable goods spending eased an unrevised 0.3% (+3.2% y/y) and nondurable goods outlays improved a lessened 0.9% (0.1% y/y), revised from 1.2%. Spending growth on services was revised to 1.0% (2.2% y/y) from 2.2%. Business fixed investment growth was revised to 7.4% (4.9% y/y) from 6.1% reflecting a 16.1% increase (12.3% y/y) in spending on nonresidential structures, revised from 11.2%, and an unrevised 7.7% rise (0.9% y/y) in spending on equipment. Residential structures investment fell 2.2% last quarter (-15.4% y/y), revised from -3.6%, following a 5.3% drop. It was the ninth consecutive quarterly decline. Government spending growth was left unchanged at 3.3% (4.1% y/y) as state & local government spending grew an unrevised 4.7% (4.0% y/y).

The change in inventories had no effect on GDP growth last quarter, revised from a 0.09%-point subtraction in the second estimate. Trade deficit narrowing added 0.04 percentage points to growth, revised from -0.22 points estimated last month. Exports fell 9.3% (+2.1% y/y), revised from -10.6%, after increasing 6.8% while imports declined 7.6% (-3.9% y/y, revised from -7.0%, following a 1.3% Q1 increase.

Corporate profits with inventory valuation & capital consumption adjustments rose 0.2% before tax (-2.7% y/y), revised from -0.4%, following a 2.6% decline in Q1. Domestic profits fell 0.6% (-4.4% y/y) after a 2.7% Q1 decrease. By contrast, foreign profits rebounded 4.5% (7.4% y/y) after a 1.6% quarterly decline in Q1.

Price inflation moderated last quarter. The GDP price index rose 1.7% (3.5% y/y), revised from 2.0%, following a 3.9% Q1 rise. A 2.0% gain had been expected. It was the weakest increase in three years. The PCE price index increased an unrevised 2.5% (3.9% y/y) after a 4.2% gain. The PCE price index excluding food and energy prices rose an unrevised 3.7% (4.6% y/y) following a 5.0% Q1 rise. The business fixed investment price index rose 0.2%, revised from 1.1%, after a 6.4% rise. The residential investment price index increased 0.2% (3.9% y/y), revised from a 1.2% decline.

The GDP data can be found in Haver’s USECON and USNA databases. USNA contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in AS1REPNA.