2Q20 GDP: Modest Revisions

Bottom Line: The third revision to 2nd Quarter GDP, revised just 0.3% higher, confirmed historic losses. Led by declines in consumption, the annualized quarterly loss stood at -31.4% for the 2nd Quarter. But this is old news on the final business day of the 3rd Quarter. Nowcasting data suggested the declines in activity bottomed as early as mid-May with the economy rebounding sharply into the early part of the 3rd Quarter. While the gains have lost momentum since late July, the early readings for the 3rd Quarter suggest a rebound of + 25 - 30% annualized is possible. The consensus forecast is +25%, while the Atlanta Fed GDPNow model suggests +32%. GDP was REVISED HIGHER by 0.3 percentage points to -31.4% in this third estimate for 2020 2nd Quarter. This compared with market expectations for no change revision to -31.7%. Economic activity is now 9.0% below its year-ago level. In final sales categories, residential investment, and consumption were revised higher while, net exports, fixed investment, exports, government purchases, and imports were revised lower. As a result of all of these changes, real final sales were revised up by 0.4 percentage points to 28.1% while real domestic demand was revised up by 0.6 percentage points to 27.1%. The GDP Price Index was REVISED UP by 0.18 points to 1.7%, compared with market expectations of 2.0%. Economy-wide prices are now 0.6% ABOVE year-ago levels.