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GDP: Q2 Rebound Revised Even Higher

August 30, 2017
Bottom Line: Economic activity expanded more than previously estimated in Q2-17. In final sales categories, residential investment, fixed investment, net exports, and consumption were revised higher with consumption driving the gains, first estimated to have contribution 190 basis points of growth and now estimated to have contributed 230bps of the 300bps of annualized total growth. Government purchases were revised a touch lower. This report suggests the 2nd Quarter ended on a strong note and indicates that 2017 Q3 GDP is tracking in line with the consensus estimate of 2.6%.

GDP was REVISED UP by 0.4 points to 3.0% in this second estimate of economic activity for Q2-17. This was higher than market expectations for an upward revision to 2.7%.

Economic activity is now 2.2% ABOVE its year ago level and 13.6% ABOVE its 2007 Q4 cyclical peak. Because most of the adjustment was due to new June data, this revision suggests that the economic activity increased modestly at the end of the quarter.

  • Consumer Spending was revised higher by 0.52% to 3.3%, contributing 2.28% to economic growth.
  • Business Fixed Investment was revised higher by 1.70% to 6.9%, contributing 0.85% to economic growth.
  • Residential Investment was revised higher by 5.59% to -6.5%, contributing -0.26% to economic growth.
  • Inventory Investment was revised slightly higher, contributing 0.02% to economic growth.
  • Net Exports were revised modestly higher with a slight decline in Exports and slight decline in Imports, contributing 0.21% to economic growth.
  • Government Purchases were revised modestly lower and fell slightly for the 4th time in the past 12 quarters, contributing -0.05% to economic growth.

As a result of all of these changes, Real Final Sales were revised moderately higher while Real Domestic Demand was revised modestly higher.

The GDP Price Index was REVISED LOWER by -0.04 points to 1.0%, compared with market expectations for no change at 1.3%. Economy-wide prices are now 1.6% ABOVE its year ago level.