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2Q19 GDP: Modest Downward Revision

August 29, 2019
Bottom Line: 2Q19 GDP was revised just a touch lower, mostly as expected, in the second reading for the quarter. While the net tally moved only slightly, there were substantial revisions to the components with the consumer now appearing even stronger in the 2nd Quarter as business investment was even slower. In final sales categories, consumption was revised higher while net exports, residential investment, government purchases, fixed investment, and were revised lower. The consumption contribution was revised higher to 3.10% and inventory investment was revised lower to -0.9%. The data indicates that 2019 Q3 GDP is tracking in line with the consensus estimate of 1.8%.

GDP was REVISED DOWN by 0.1 points to 2.0% in this second estimate of economic activity for Q2-19. This was in line with market expectations for a downward revision to 2.0%.

Economic activity is now 2.3% ABOVE its year ago level and 26.9% ABOVE its 2007 Q4 cyclical peak. Because most of the adjustment was due to new June data, this revision suggests that the economic activity slowed slightly at the end of the quarter.

  • Consumer Spending was revised higher by 0.39% to 4.7%, contributing 3.10% to economic growth.
  • Business Fixed Investment was revised lower by -0.04% to -0.6%, contributing -0.09% to economic growth.
  • Residential Investment was revised lower by -1.33% to -2.9%, contributing -0.11% to economic growth.
  • Inventory Investment was revised slightly lower, contributing -0.91% to economic growth.
  • Net Exports were revised modestly lower with a modest decline in Exports and slight decline in Imports, contributing -0.72% to economic growth.
  • Government Purchases were revised slightly lower but grew moderately for the 9th time in the past 12 quarters, contributing 0.77% to economic growth.

As a result of all of these changes, Real Final Sales was revised slightly higher while Real Domestic Demand was revised modestly higher. The GDP Price Index was REVISED UP by 0.01 points to 2.4%, compared with market expectations for no change at 2.4%. Economy-wide prices are now 1.8% ABOVE its year ago level.