September 28, 2017

2Q16 Gross Domestic Product, 3rd Estimate: An Annualized 3.1 Percent, Up From Previous 3.0 Pct.

Filed under: Economy,Taxes & Government — Tom @ 9:40 am

From the Bureau of Economic Analysis (full release with tables):

Real gross domestic product (GDP) increased at an annual rate of 3.1 percent in the second quarter of 2017, according to the “third” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.2 percent.

The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was 3.0 percent.

With this third estimate for the second quarter, private inventory investment increased more than previously estimated, but the general picture of economic growth remains the same.

Real gross domestic income (GDI) increased 2.9 percent in the second quarter, compared with an increase of 2.7 percent in the first. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 3.0 percent in the second quarter, compared with an increase of 2.0 percent in the first quarter.

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

The acceleration in real GDP in the second quarter reflected an upturn in private inventory investment, an acceleration in PCE, a deceleration in imports, and an upturn in federal government spending that were partly offset by a downturn in residential fixed investment, a deceleration in exports, and a downturn in state and local government spending.

Current-dollar GDP increased 4.1 percent, or $192.3 billion, in the second quarter to a level of $19,250.0 billion. In the first quarter, current-dollar GDP increased 3.3 percent, or $152.2 billion.

The price index for gross domestic purchases increased 0.9 percent in the second quarter, compared with an increase of 2.6 percent in the first quarter (table 4). The PCE price index increased 0.3 percent, compared with an increase of 2.2 percent. Excluding food and energy prices, the PCE price index increased 0.9 percent, compared with an increase of 1.8 percent (appendix table A).

Updates to GDP

The revision to the percent change in real GDP primarily reflected an upward revision to private inventory investment.

Component analysis coming shortly …



The only meaningful component here is how the Health Care line item increased the 3rd estimate by 0.21 points. “Other services” includes health insurance premiums paid by private individuals, but it’s impossible to know how much of that 0.07-point increase is due to that element as opposed to others.

Overall, as the two highlighted figures show, this was a “no change” report which created a very minor change due to rounding. For one quarter the Trump administration has gotten the “impossible” 3 percent growth it promised. Whether it’s a one-time event or the beginning of a trend remains to be seen. According to the Atlanta Fed at the moment, it doesn’t look good, given their estimate of 2.1 percent for the third quarter. However, Moody’s is carrying an estimate of 3.0 percent as of September 8, which is clearly a bit dated (Moody’s may have decided to hide everything behind their subscription wall during the past few weeks, so we’ll have to see to if they publish any update revisions in the coming days).

Obviously, the hurricanes are going to going to have an impact, which may explain why Moody’s is holding back.



  1. It was a rather wild swing for health care over the three releases, with it settling down right in the middle of the prior two. It is trending in a good direction, with the second-lowest contribution to GDP growth in the PlaceboCare era (2Q2014-present).

    As for spending on health insurance, the latest annual update of personal consumption expenditures (Table 2.4.5 in the BEA’s interactive tables) show that net health insurance was a major driver of increased spending on the broader financial services and insurance category. After a slight slowdown in 2012 (when $139 billion was spent on health insurance, versus $147 billion in 2011, $136 billion in 2010 and $119 billion in 2009), it increased to $147 billion in 2013, $169 billion in 2014, $178 billion in 2015 and $185 billion last year.

    Comment by steveegg — September 28, 2017 @ 10:13 am

  2. Thanks for that extra info, Steve. Don’t see what’s stopping them from breaking that down quarterly, but as far as I can tell, it can’t be done.

    Comment by Tom — September 28, 2017 @ 2:10 pm

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