United States: Upward revised Q2 GDP confirms newfound economic strength
August 28, 2014
In the second quarter, GDP increased at a seasonally adjusted annualized rate (SAAR) of 4.2%, according to the second estimate released by the Bureau of Economic Analysis (BEA) on 28 August. The print marked a slight upward revision from the 4.0% expansion reported in the advance estimate and also beat market expectations of a 3.9% increase. The revised second quarter reading, which represented the third-strongest result since before the financial crisis, mainly reflected that the increase in non-residential fixed investment was greater than initially reported. The latest Q2 data reflect broad-based economic strength and suggest that the recovery is back on track after a dismal Q1.
On the domestic side of the economy, private consumption rose 2.5%, which was unchanged from the advance estimate. Non-residential fixed investment jumped from a 1.6% increase in Q1 to an 8.4% expansion in Q2 (advance estimate: +5.5% quarter-on-quarter SAAR). Meanwhile, residential fixed investment grew 7.2% (advance estimate: +7.5% qoq SAAR). Government spending grew 1.4% in Q2 (advance estimate: +1.6% qoq SAAR).
On the external front, exports were revised up, while imports were revised down. According to the second estimate, exports increased a robust 10.1% in Q2 (advance estimate: +9.5% qoq SAAR). This marked a significant turnaround from the 9.2% contraction registered in Q1. Imports increased 11.0% in the second quarter (advance estimate: +11.7% qoq SAAR). As a result of the growth in exports, the external sector’s net contribution to overall growth was revised up from minus 0.6 percentage points to minus 0.4 percentage points.
Author: Carl Kelly, Economist