Article Attachment

The attached file contains this articles commentary as well as tables and charts of the data.
Download Attachment

2Q21 GDP: Smaller Than Expected Upward Revision

August 26, 2021
Bottom Line:  The second reading of 2nd Quarter GDP showed a smaller than expected upward revision.  Most revisions were small.  As we expected, residential investment was revised lower as housing activity slowed late in the quarter.  Consumption was revised just slightly higher, as was business fixed investment.  The largest revisions were in the volatile net exports category, revised to show less of a drag on growth.  While most of the data in this report are pretty backward-looking nearly two months into the 3rd Quarter, there is more evidence that the economy lost momentum late in the 2nd Quarter.  With many fiscal benefits programs ending and the delta variant causing continued uncertainty for many businesses, consensus estimates of 6.9% annualized growth in the 3rd Quarter still look too optimistic.
GDP was REVISED UP by 0.1 points to 6.6% in this second estimate of economic activity for Q2-21.  This was in line with market expectations for an upward revision to 6.6%.
Economic activity
was 12.2% ABOVE its year-ago level and 29.1% 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 slightly at the end of the quarter.
Consumer Spending
was revised higher by 0.03% to 11.9%, contributing 7.80% to economic growth. Business Fixed Investment was revised higher by 1.23% to 9.3%, contributing 1.21% to economic growth. Residential Investment was revised lower by -1.71% to -11.5%, contributing -0.58% to economic growth. Inventory Investment was revised slightly lower, contributing -1.30% to economic growth.
Net Exports were revised sharply higher with a modest increase/growth in Exports and moderate decline in Imports, contributing -0.24% to economic growth. Government Purchases were revised slightly lower and fell modestly for the 4th time in the past 12 quarters, contributing -0.33% to economic growth.
 As a result of all of these changes, Real Final Sales was revised modestly higher while Real Domestic Demand was unchanged. The GDP Price Index was REVISED UP by 0.07 points to 6.3%, compared with market expectations of 6.0%. Economy-wide prices were 4.1% ABOVE its year-ago level.