2nd Quarter GDP Revised from 2.5% to 2.9%
The “slowing economy” meme suffered at least a minor setback today as the Bureau of Economic Analysis reported that Real Gross Domestic Product grew at an annualized rate of 2.9% in the second quarter, up from 2.5%.
Key excerpt:
The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE) for services, private inventory investment, nonresidential structures, exports, and state and local government spending that were partly offset by negative contributions from residential fixed investment and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.
As noted at my post on the original 2nd quarter GDP announcement, the federal spending component change cut about a half-point off of second-quarter growth. Today’s announced revision means that second-quarter GDP growth in the rest of the economy was a very decent but not robust 3.3% – 3.4%.
Oh, and who thinks the federal spending component of GDP will slow down in subsequent quarters like it did in the second?
The slowdown in residential fixed investment at an annualized rate of -9.8% (i.e., an actual drop of 2.4% during the quarter) is not a bubble-like radical drop by any stretch. And it’s gratifying that the rest of the economy is for the most part picking up the slack occurring in the housing sector.
