Keeping you up to date on the latest data releases.
- Real GDP
Real GDP rose at an annualized rate of 2.4 percent in the second quarter, in line with consensus estimates. The “good” news is that slowdown followed an upward revision (during the annual benchmark) of 1.0 percentage point to first quarter real GDP, which now stands at 3.7 percent. Over the past four quarters, output has grown 3.2 percent. The “bad” news is that output over the past three years was a little weaker than what we previously thought. The year-over-year growth rate in real GDP was revised down from 2.5 percent to 2.3 percent 2007, from −1.9 percent to −2.8 percent for 2008, and actually ticked up from 0.1 percent to 0.2 percent for 2009. Said another way, the current level of real GDP as of the first quarter of 2010 is 0.8 percent lower than the previous estimate. The BEA noted that the largest contributors to the benchmark revision were downward adjustments to consumption and state and local government spending, as well as an upward revision to imports (which enter in as a negative in GDP accounting). Turning back to the second quarter, consumption rose 1.6 percent, nearly matching a 1.9 percent gain in the first and pushing its 4-quarter growth rate up to 1.6 percent. Private investment accelerated markedly from the first to second quarter of 2010, increasing from an annualized growth rate of 3.4 percent to 19.1 percent. Nonresidential fixed investment jumped up 17.0 percent in the second quarter, its largest quarterly increase since 2006:Q1. Equipment and software continued its rapid increase, rising 21.9 percent during the quarter, following a 20.5 percent and 14.6 percent in the previous two quarters. Interestingly, investment in structures turned around a string of seven negative quarters, increasing 5.1 percent. The series is still down 14.4 on a year-over-year basis, however. Residential investment, likely influenced by tax incentives, jumped up 27.8 percent in the second quarter, adding 0.6 percentage points (pp) to real GDP growth, after subtracting 0.3 pp in Q1. Continued inventory accumulation added 1.1 pp to output growth during the quarter, compared to a 2.6 pp contribution in the first quarter. Elsewhere, exports increased by 10.4 percent though that was outpaced by a 28.8 percent spike-up in imports, subtracting 2.8 pp from growth, on net. Real final sales of GDP (GDP less inventories) eked out a slight 1.3 percent gain in the second quarter, a tad firmer than a 1.1 percent increase in the first quarter which helped to pull its 4-quarter growth rate up from 0.9 percent to 1.2 percent. Also, the personal savings rate rose from 5.5 percent in the first quarter to 6.2 percent, edging back up towards its recent peak of 7.2 percent in 2009:Q2.