August 29, 2013

2Q13 Gross Domestic Product (082913): An Annualized 2.5%, Revised Up From 1.7%

Filed under: Economy,Taxes & Government — Tom @ 8:30 am

Originally posted at 8:15; moved to the top.


  • The Associated Press has already weighed in with 2.2% in several reports, up from 1.7% in the initial report.
  • Bloomberg is also at 2.2%.
  • Interesting — Early this month, the immediate reaction to more favorable export-import news at Reuters was as follows: “Economists, who had expected the trade gap to narrow only to $43.5 billion in June, said second-quarter GDP growth could be revised up to as high as an annual pace of 2.5 percent from the 1.7 percent rate initially estimated by the government.”

So maybe the contrary news I’m going to mention is already baked into the 2.2% current estimates.

That contrary news concerns housing. Last week’s new home sales report, in addition to telling us that July was awful, revised April, May, and June down by 69,000 single-family units. We’re told constantly that each new home is $90,000 in GDP. That’s a $6.2 billion impact, or $24.8 billion annualized. Against $16 trillion in annualized GDP, that’s a 0.16% impact all by itself.

If what’s happening in new homes was happening to an extent through the rest of the economy and is just now being detected, it’s not too difficult to imagine a hit of 0.3% or more, maybe even 0.5%.

But again, given what I pointed out concerning Reuters higher estimate early in the month, perhaps that cooling in housing and elsewhere is already built-in. We’ll see.

The report will be here at 8:30 a.m.

HERE IT IS, the first upside surprise in ages (permanent link):

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.5 percent in the second quarter of 2013 (that is, from the first quarter to the second quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.1 percent.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 1.7 percent. With this second estimate for the second quarter, the increase in exports was larger than previously estimated, and the increase in imports was smaller than previously estimated.

The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, and residential fixed investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP in the second quarter primarily reflected upturns in exports and in nonresidential fixed investment and a smaller decrease in federal government spending that were partly offset by an acceleration in imports and decelerations in private inventory investment and in PCE.

Side-by-sides of components coming up …

Okay, it’s really all about exports and imports, and there’s not much else to say:


Zero Hedge’s take:

… (this) should make everyone happy (well not the market which desperately need bad news to go higher). However, as usual, the real news is underneath the surface, which is where we find that both real components of GDP growth, Personal Consumption and Fixed Investment were actually revised lower from the preliminary print.

Well, okay, but not by much. Given almost no change in the residential component vs. the new-home sales revisions noted earlier, I’m thinking that September’s final revision might come down by a tenth of a point or two.

So who will be the first person in the press to say how fantabulous 2.5% annualized growth is?



  1. Don’t forget almost 10% of the growth was in inventories.

    Comment by Scott Landmann — August 29, 2013 @ 7:47 pm

  2. Correction, 25% of growth.

    Comment by Scott Landmann — August 29, 2013 @ 7:54 pm

  3. #1 and #2, haven’t looked at previous quarters to see if inv. buildup is ongoing. Don’t think it is.

    UPDATE: 4Q12 had a 2.00-point plunge in inventories. Sum of past 6 quarters is 0.79 points.

    Comment by Tom — August 29, 2013 @ 8:21 pm

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