United States economic growth revised up to 3 per cent in Q2

Posted August 31, 2017

Real GDP represents the value of the production of goods and services in the economy and is adjusted for inflation.

That was revised up from the 2.8 percent pace reported in July and accounted for the bulk of the pickup in economic growth in the second quarter.

Rising consumer spending, nonresidential fixed investment, exports, federal spending and private inventory investment drove the GDP increase in the second quarter.

Corporate profits (after IVA and CCA) increased by $26.8bn (1.3%) in the second quarter after a decrease of $46.2bn (2.1%) in the first quarter.

"If not for the uncertain impact of Harvey, we would be tempted to raise our current 2.4% estimate for Q3 GDP growth", he says in an economics update.

The figure was revised up by an unusually-large four-tenths from last month's growth estimate, due to higher consumer spending and business investment than in the initial report.

The "second" estimate released by the Bureau of Economic Analysis (BEA) reflects an upward revision from the initial estimate of 2.8%.

The report said consumer spending on wireless phones and their associated services pushed intellectual property investment up 4.9 percent.

Meanwhile separate figures released by payrolls provider ADP showed the United States private sector added 237,000 jobs in August, massively overshooting analyst predictions of less than 185,000 and adding further support to the dollar. Fallout from Hurricane Harvey may also trim third-quarter growth, though reconstruction is likely to help expansion in the following period. For the year a whole, I am now predicting real GDP growth of 2.2 percent, with 2.8 percent growth for the current third quarter.

The Commerce Department issues its second look at the performance of the overall economy for the April-June quarter.

In the first quarter, real GDP increased 1.2 percent. Trump submitted a budget to Congress in May that was based on achieving growth rates in coming years of 3 percent on a sustained basis. As a result, the real GDP increased by 2.1 percent at the annual rate in the first half of 2017.

The pace of growth is in line with the Trump administration's long-term goal of 3 per cent.

Real gross domestic income (GDI) increased 2.9 percent in the second quarter, compared with an increase of 2.7 percent (revised) in the first.

Meanwhile, residential investment subtracted less that thought previously, shrinking 6.5 percent as did net exports that totalled -USD 613.4 billion.