United States: Economy rebounds in Q2 after dismal Q1 result
July 30, 2014
In the second quarter, GDP expanded at a seasonally adjusted annualized rate (SAAR) of 4.0% according to the advance estimate released by the Bureau of Economic Analysis (BEA) on 30 July. The print marked a significant rebound relative to the revised 2.1% contraction recorded in the first quarter (previously reported: -2.9% quarter-on-quarter SAAR) and beat market expectations of a 3.0% increase. The growth turnaround reflects a broad-based improvement both domestically and with respect to the external sector.
On the domestic side, private consumption accelerated from a 1.2% increase in Q1 to a 2.5% expansion in Q2. Non-residential fixed investment picked up from a 1.6% rise in Q1 to a 5.5% expansion in Q2. Residential fixed investment growth rebounded notably to a 7.5% expansion in Q2 (Q1: -5.3% qoq SAAR). Business inventories also contributed to growth. Meanwhile, government spending expanded 1.6% in Q2, which contrasted the 0.8% drop in Q1.
Exports growth rebounded spectacularly to a 9.5% expansion in the second quarter (Q1: -9.3% qoq SAAR) and imports increased 11.7% (Q1: +2.2% qoq SAAR). Consequently, the external sector’s net contribution to overall growth improved from minus 1.7 percentage points in the first quarter to minus 0.6 in the second.
Author: Carl Kelly, Economist