Recent Updates

  • China: 70-City Property Prices (Sep), Capacity Utilization, GDP (Q3)
  • US: Regional Retail Sales (Sep)
  • Spain: Motor Vehicle Registrations (Sep)
  • Canada Regional: CPI by Province (Sep), Retail Trade by Province (Aug)
  • Canada: CPI (Sep), Retail Trade (Aug)
  • Ireland: General Government Debt, General Government Transactions (Q2)
  • Latvia: PPI (Sep)
  • more updates...

Economy in Brief

U.S. GDP Growth Reduced; Inventory Growth & Foreign Trade Weakened
by Tom Moeller August 27, 2010

Disappointing news about the current economic recovery continued with today's report that U.S. real GDP growth last quarter was revised down. The new figure of 1.6% (AR) compared to 2.4% in the advance report. Still, the latest was barely above Consensus expectations for a revision to 1.4%. It remained the fourth straight quarter of positive GDP growth since the recession's end. At 3.0%, it remained less than half the norm for the year following other deep postwar recessions.

The revision was due to a shaved contribution from inventory accumulation of 0.6 percentage points. An increased subtraction from trade deficit deterioration to 3.4 percentage points also weakened GDP growth. Export growth was lessened to 9.2% (14.1% y/y) while growth in imports was raised to 32.4% (17.2% y/y).

Growth in domestic final demand was raised to 4.3% (AR), mostly due to increased personal consumption growth of 2.0% (1.7% y/y). Business fixed investment growth also was nudged up to 17.6% (5.3% y/y). Last quarter's strength was led by a 15.8% y/y surge in equipment spending. Offsetting these figures was residential investment where its rebound was reduced slightly to 27.1% (5.1% y/y). Gov't spending was little-revised at 4.3%.

Corporate profit figures for 2Q were released for the first time and growth of 4.6% (39.2% y/y) was the weakest of the last four quarters. Weaker or negative growth across sectors accounted for the slowdown. Nonfinancial sector earnings led last quarter's gain with an 8.1% increase (47.1% y/y) while earnings from abroad nudged up 1.4% (18.2% y/y). Financial sector earnings slipped 0.1% from 1Q but the steep interest rate yield curve kept them up 48.3% y/y.

Price inflation as measured by the chained GDP price index improved to 1.9%. Nevertheless, the y/y increase of 0.8% remained close to the lowest reading since the early-1950s. The personal consumption chain price index slipped marginally but the 1.9% year-to-year gain remained nearly the quickest since 2008, due largely to higher energy prices. The price index for fixed business investment also ticked up just 0.2% (-2.3% y/y) and the residential investment price index fell at a 3.4% rate (-0.5% y/y).

The Economic Outlook and Monetary Policy is the title of today's speech by Fed Chairman Ben S. Bernanke and it can be found here.

Chained 2005 $, % AR Q1'10 (Prelim.) Q2'10 (Adv.) Q1'10 Q4'09 Q2 Y/Y 2009 2008 2007
GDP 1.6 2.4 3.7 5.0 3.0 -2.6 -0.0 1.9
   Inventory Effect 0.6 1.1 2.6 2.8 1.9 -0.5 -0.5 -0.3
  Final Sales 1.0 1.3 1.1 2.1 1.1 -2.1 0.5 2.2
    Foreign Trade     Effect -3.4 -2.8 -0.3 1.9 -0.8 1.0 -1.1 0.7
  Domestic Final   Demand 4.3 4.1 1.3 0.2 1.9 -3.1 -0.6 1.5
  Personal   Consumption 2.0 1.6 1.9 0.9 1.7 -1.2 -0.3 2.4
  Business Fixed   Investment 17.6 17.0 7.8 -1.4 5.3 -17.1 0.3 6.7
  Residential   Investment 27.1 27.8 -12.3 -0.8 5.2 -22.9 -24.0 -18.7
  Government   Spending 4.3 4.4 -1.6 -1.4 0.7 1.6 2.8 1.3
  Chained GDP Price   Index 1.9 1.8 1.0 -0.2 0.8 0.9 2.2 2.9
close
large image