The second look at Q2 2019 GDP:

  • Initial reading was +2.1%
  • Q1 was 3.1%
  • Q4 was 1.1%
  • GDP rose 2.3% y/y

Details:

  • Personal consumption 4.7% vs 4.3% expected
  • Initial personal consumption +4.3%
  • Consumer spending on durables +13.0% vs +12.9% initially
  • Business investment -0.6% vs -0.6% initially (first contraction since 2016)
  • Home investment -2.9% vs -1.5% initilly
  • Exports -5.8% vs -5.2% initially
  • Imports +0.1% vs +0.1% initially
  • Corporate profits +5.1%

Inflation:

  • GDP price index 2.4% vs 2.4% initially
  • Prior GDP price index 1.1%
  • Core PCE 1.7% vs 1.8% initially
  • Prior core PCE 1.1%
  • GDP deflator 2.5% vs +2.5% initially

Personal consumption added 3.1 percentage points to GDP while gross private investment cut 1.11 points and trade was a 0.72 pp drag. Government consumption boosted GDP by 0.77 pp but the bulk of it Federal. Inventories lowered GDP by 0.91 pp.

Never underestimate the power of the US consumer. The worry here though is if the consumer slowed down. Even a modest slowdown from the blistering 4.7% pace would drop GDP below 2%. So far consumer confidence has held up.