2nd Quarter GDP Revised to Indicate Growth at a 6.6% Rate The Second Estimate of our 2nd Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services grew at a 6.6% rate during the quarter, revised from the 6.5% growth rate reported in the advance estimate last month, as growth in fixed investment and exports was greater than previously estimated, while imports increased less than originally estimated, the impact of which more than offset a larger contraction of private inventories than was shown in the advance report . . . In current dollars, our second quarter GDP grew at a 13.19% annual rate, increasing from what would work out to be a ,038.2 billion a year rate in the 1st quarter to a ,731.4
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2nd Quarter GDP Revised to Indicate Growth at a 6.6% Rate
The Second Estimate of our 2nd Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services grew at a 6.6% rate during the quarter, revised from the 6.5% growth rate reported in the advance estimate last month, as growth in fixed investment and exports was greater than previously estimated, while imports increased less than originally estimated, the impact of which more than offset a larger contraction of private inventories than was shown in the advance report . . . In current dollars, our second quarter GDP grew at a 13.19% annual rate, increasing from what would work out to be a $22,038.2 billion a year rate in the 1st quarter to a $22,731.4 billion annual rate in the 2nd quarter, with the headline 6.6% annualized rate of increase in real output arrived at after annualized GDP inflation adjustments averaging 6.1% was computed from the price changes of the GDP components and applied to their current dollar change…
As we review this month’s revisions, remember that the GDP news release reports all quarter over quarter percentage changes at an annual rate, which means that they’re expressed as a change a bit over 4 times of that what actually occurred from one 3 month period to the next, and that the prefix “real” is used to indicate that each change has been adjusted for inflation using price changes chained from 2012, and then that all percentage changes in this report are calculated from those 2012 dollar figures, which would be better thought of as a quantity indexes than as any reality based dollar amounts. For our purposes, all the data that we’ll use in reporting the changes here comes directly from the pdf for the 2nd estimate of 2nd quarter GDP, which we find linked to on the BEA’s GDP page, which also links to the GDP tables and source data on Excel and other technical notes. Specifically, we refer to table 1, which shows the real percentage change in each of the GDP components annually since 2018 and quarterly since Q3 of 2017, table 2, which shows the contribution of each of the components to the GDP figures for those quarters and years; table 3, which shows both the current dollar value and inflation adjusted value of each of the GDP components; and table 4, which shows the change in the price indexes for each of the GDP components…
Growth of real personal consumption expenditures (PCE), the largest component of GDP, was revised from the 11.8% growth rate reported last month to a 11.9% growth rate in this 2nd estimate . . . that growth rate figure was arrived at by deflating the 19.1% growth rate in the dollar amount of consumer spending with the PCE price index, which indicated dollar weighted consumer inflation grew at a 6.5% annual rate in the 2nd quarter, which was revised from the 6.4% PCE inflation rate reported a month ago…real consumption of durable goods grew at a 11.3% annual rate, which was revised from the 9.9% growth rate shown in the advance report, and added 0.99 percentage points to GDP, as real consumption of motor vehicles, recreational goods and vehicles and durables other than furniture and appliances all contributed significantly to the durable goods increase . . . real consumption of nondurable goods by individuals rose at a 13.7% annual rate, revised from the 12.6% increase rate reported in the 1st estimate, and added 1.96 percentage points to 2nd quarter economic growth, as growth in real clothing and footwear consumption at a 38.0% annual rate accounted for more than a third of the non-durables growth . . . at the same time, consumption of services grew at a 11.3% annual rate, revised from the 12.0% growth rate reported last month, and added 4.85 percentage points to the final GDP tally, with 68.5% growth in real consumption of food services and accommodations accounting for nearly half the growth in services…
Meanwhile, seasonally adjusted real gross private domestic investment shrunk at a 4.0% annual rate in the 2nd quarter, revised from the 3.5% investment contraction reported last month, as real private fixed investment grew at a 3.4% rate, rather than at the 3.0% rate reported in the advance estimate, while the previously reported steep contraction in inventory growth was revised even lower . . . real investment in non-residential structures was revised from contraction at a 7.0% rate to contraction at a 5.4% rate, while real investment in equipment was revised to show growth at a 11.6% rate, down from the 13.0% growth rate previously reported…at the same time, the quarter’s investment in intellectual property products was revised from growth at a 10.7% rate to growth at a 14.6% rate, while the contraction rate of residential investment was revised from -9.8% to -11.5% annually…after those revisions, the decrease in investment in non-residential structures subtracted 0.14 percentage points from the 2nd quarter’s growth rate, the increase in investment in equipment added 0.63 percentage points to the quarter’s growth, greater investment in intellectual property added 0.72 percentage points, while the decrease in investment in residential structures subtracted 0.58 percentage points from the 2nd quarter’s GDP growth…
At the same time, investment in real private inventories contracted at an inflation adjusted $169.4 billion rate in the 2nd quarter, revised from the originally reported inventory shrinkage at a $165.9 billion rate…this came after inventories had shrunk at an inflation adjusted $88.3 billion rate in the 1st quarter, and hence the $81.1 billion reduction in real inventory growth subtracted 1.30 percentage points from the 2nd quarter’s growth rate, revised from the 1.13 percentage point subtraction due to inventory contraction that was shown in the advance estimate . . . however, since shrinkage of inventories indicates that less of the goods produced during the quarter were left ‘sitting on the shelf’ or in a warehouse, the quarter over quarter decrease in their growth by $81.1 billion meant that real final sales of GDP were relatively greater by that much, or enough to boost 2nd quarter growth in real final sales of GDP to a 7.9% rate, revised from the 7.7% real final sales growth rate shown in the advance estimate, but a decrease from the real final sales growth at a 9.1% rate in 1st quarter, when that quarter’s larger decrease in inventory growth meant that a greater part of the increase in domestic output had been sold..
The previously reported increase in real exports was revised higher with this estimate, and at the same time the previously reported increase in real imports was revised lower, and as a result our foreign trade was a smaller subtraction from GDP than was reported in the advance estimate . . . our real exports grew at a 6.6% rate rather than the 6.0% rate reported in the first estimate, and since exports are added to GDP because they are part of our production that was not consumed or added to investment in our country, their growth added 0.70 percentage points to the 2nd quarter’s growth rate, up from the 0.64 percentage point addition shown in the advance report . . . .mean while, the previously reported 7.8% increase in our real imports was revised to a 6.7% increase, and since imports subtract from GDP because they represent either consumption or investment that was not produced here, their increase subtracted 0.94 percentage points from 2nd quarter GDP, revised from the advance report subtraction of 1.09 percentage points . . . thus, our deteriorating trade balance subtracted a net 0.24 percentage points from 2nd quarter GDP, revised from the rounded 0.44 percentage point subtraction that had been indicated in the advance estimate…
Finally, there were negative revisions to real government consumption and investment in this 2nd estimate, as the entire government sector shrunk at a 1.9% rate, revised from the 1.5% contraction rate previously reported . . . real federal government consumption and investment was seen to have shrunk at a 5.2% rate from the 1st quarter in this estimate, which was revised from the 5.0% contraction rate reported in the 1st estimate…real federal outlays for defense were revised to show contraction at a 0.9% rate, rather than the 0.8% contraction rate previously reported, and subtracted 0.04 percentage points from 2nd quarter GDP, while all other federal consumption and investment shrunk at a 10.6% rate, more than the 10.4% contraction rate previously reported, and subtracted 0.33 percentage points from 2nd quarter GDP . . . meanwhile, real state and local consumption and investment grew at a 0.3% rate in the quarter, which was revised from the 0.8% growth rate reported in the 1st estimate, and added 0.04% percentage points to 2nd quarter GDP . . . note that government outlays for social insurance are not included in this GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, thus indicating there was an increase in the output of those goods or services…