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Economy in Brief
U.S. Housing Affordability Declines Further in June
The NAR Fixed Rate Mortgage Housing Affordability Index fell 3.6% in June...
EMU Output Makes Solid Gain in June
The European Monetary Union posted a 0.7% increase for industrial output in June...
U.S. Producer Prices Fall During July; Core Increase Weakens
The Producer Price Index for Final Demand fell 0.5% during July...
U.S. Unemployment Claims Continue on an Uptrend
Initial claims for unemployment insurance filed in the week ended August 6 rose 14,000 to 262,000...
RICS Survey Points to More U.K. Housing Sector Weakness
The survey of housing market conditions in the U.K. continues to show strength in prices versus weakness...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller October 31, 2007
U.S. real GDP growth last quarter of 3.9% (AR), in the advance report from the Commerce Department, was higher than expectations for 3.2% growth.
The contribution to growth from net export improvement was another 0.9 percentage points after the 1.3 percentage point contribution during 2Q. Exports boomed at a 16.2% annual rate (9.6% y/y) while import growth of 5.2% (2.9% y/y) reflected the slowdown in U.S. final demand growth.
Growth in final sales to domestic purchasers at 2.5% (AR) wasn't bad following 2.1% 2Q growth and 1.7% growth in 1Q, but the likely increase for all of this year around 2.0% will lag last year's advance of 2.7% and 3.3% in 2004.
The shortfall in domestic demand growth was led by a whopping 20.1% AR (-16.4% y/y) decline in residential investment. It was near the top quarterly rate of decrease during this down cycle in the housing sector.
Firm growth in business fixed investment was again a mainstay of overall domestic demand. It rose 7.9% AR (4.8% y/y) rate after an 11.0% surge in 2Q. Spending on structures, in late cycle fashion, led that increase and rose 12.4% AR (12.8% y/y). Spending on equipment & software also was firm at 5.9% (AR), the strongest since 1Q '06, but the y/y gain of 1.4% was reduced by weak growth or q/q declines from 2Q '06 to 1Q '07.
Growth in real personal consumption expenditures also wasn't bad at 3.0% (3.0% y/y) which was double growth during 2Q. Growth in spending on durable goods amounted to 4.4% (4.7% y/y) as 11.8% growth in spending on furniture & appliances offset a 5.4% drop in spending on motor vehicles. Spending on other durable goods boomed at an 11.7% rate. Nondurable goods spending turned in a 2.7% (2.4% y/y) advance and services spending growth was steady at 2.9% (3.0% y/y).
Inventories added just 0.4 percentage points to GDP growth after a 0.2 point contribution during 2Q. That contribution has been negative this year.
The GDP chain price index rose just 0.8% led by declines in both the nonresidential and residential price indexes. Consumer prices rose only 1.7%, held back by the decline in gasoline prices, while less food & energy it rose just 1.8% (1.9% y/y).
Chained 2000$, % AR | 3Q ' 07 Advance | 2Q '07 | Y/Y | 2006 | 2005 | 2004 |
---|---|---|---|---|---|---|
GDP | 3.9 | 3.8 | 2.6 | 2.9 | 3.1 | 3.6 |
Inventory Effect | 0.4 | 0.2 | -0.4 | 0.1 | -0.2 | 0.4 |
Final Sales | 3.5 | 3.6 | 3.0 | 2.8 | 3.3 | 3.3 |
Foreign Trade Effect | 0.9 | 1.3 | 0.9 | -0.1 | -0.2 | -0.7 |
Domestic Final Demand | 2.5 | 2.1 | 2.1 | 2.7 | 3.3 | 3.8 |
Chained GDP Price Index | 0.8 | 2.6 | 2.3 | 2.6 | 1.7 | 2.1 |