Q2 GDP Growth Rate of 1.7%

The economy is estimated to have grown at an annualized rate of 1.7%, according to Bureau of Economic Analysis (BEA).  This figure is up from BEA's initial estimate of 1.5%.  It is also 10bps higher than our number. 

 

Although growth in personal consumption was revised higher by 20bps (from BEA's first estimate), deceleration remained evident; 1.7% versus 2.4% in Q1.  As we mentioned on 7/27, services was the only component of personal consumption that increased Q/Q.  BEA's estimate of durable goods consumption was revised higher for Q2, from negative to no growth.

 

BEA lowered its estimate of gross private domestic investment significantly to 3.0% from 8.5%, which basically shows a slowdown from Q1's 6.1%.  Such deceleration was driven by a lower residential private investment growth rate; 8.9% from 20.5% in Q1.

 

The upward revision in government spending also contributed to the higher second estimate of Q2 GDP.  Such government portion was adjusted to a mere -0.9% from an initial estimate of -1.4%.  As we mentioned in late July, from a political perspective, it is always interesting (and not surprising) to see national defense spending improve from -7.1% to a mere -0.1% annualized rate (revised from an initial estimate of -0.4%), while nondefense spending basically plummets from +1.8% to -0.3%!