ANALYSIS:US Q2 GDP Rev +1.3%, GDP Px +2.5%; Q3 Looks Moderate
–Real Final Sales +1.6%; Revs to Services Consumption, Trade
By Joseph Plocek
WASHINGTON (MNI) – The latest GDP revisions shed little light on
current growth. They still show a very slow economy in the first half of
the year, and recent data suggest only moderate growth currently.
Q2 real GDP was revised up 0.3 point to +1.3%, bouncing the rate
back to the preliminary estimate, though the composition is more
favorable. The most recent change mainly reflects more consumption of
services as source data were altered, and fewer imports in the trade
reports. Growth is approximately midway between the paces for Q4:2010
In services, more recreation and gas & electric usage were offset
by lesser costs for financial services and insurance. The latter might
simply reflect lower interest rates imputing smaller costs. The trade
reports showed fewer imports and only slightly more exports, upping the
external sector’s contribution to growth.
New tables released for the first time with the GDP report show
utilities and housing now contribute 0.09 point to Q2 growth, +0.07 from
the prior estimate; recreation added 0.16 point. Financial services cut
0.12 point. Net exports added 0.15 point more.
The revisions were pretty much as expected (median estimate in the
Market News International poll was +1.2% for real GDP) and tell little
about growth ahead.
In addition to rising consumption and net exports, Q2 saw more
federal government spending and nonresidential fixed investment. Final
sales printed +1.6%, far better than the flat reading in Q1.
As Q3 ends it appears the U.S. will post further moderate growth,
but more will be known when August real consumption data are released
tomorrow. If government spending and consumption remain positive, there
is a good chance the overall pace will pick up slightly.
Corporate profits were revised up from the preliminary report, and
now are up $61.2 billion using the current production measure. A
sectoral breakdown shows the bulk of domestic profits come from
manufacturing and wholesale trade. Banks are still losing money in the
aggregate. Overall profits before tax were up $13.5 billion.
GDP prices are now +2.5%. Falling oil costs in Q3 should help
The Commerce Department said it will switch source data for
aircraft shipments in Q3 to the factory orders report. This could affect
exports and investment computations. Q3 GDP data are due for release
GDP Components: Q4 Q1 Q2 prelm Q2 rev Q2 final
Real growth +2.3% +0.4% +1.3% +1.0% +1.3%
Real final sales +4.2 +0.0 +1.1 +1.2 +1.6
PCE +3.6 +2.1 +0.1 +0.4 +0.7
Nonres fixed invest +8.7 +2.1 +6.3 +9.9 +10.3
Res fixed invest +2.5 +2.4 +3.8 +3.4 +4.2
Net Exprt Contrib add 1.37 cut 0.34 add 0.58 add 0.09 add 0.24
Inventory Contrib cut 1.79 add 0.32 add 0.18 cut 0.23 cut 0.28
**Market News International Washington Bureau: (202)371-2121**