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Economy in Brief

U.S. GDP Growth Is Revised Up But Profits Are Weak
by Tom Moeller  August 29, 2012

Last quarter's real GDP growth was revised up to an expected 1.7% annual rate following the advance estimate of 1.5% growth. The revision reflected offsetting changes to foreign trade and inventories. Domestic demand growth of 1.6% was minimally different from the advance estimate.

Corporate profits with IVA & CCA for Q2, released for the first time, ticked up just 0.5% (6.1% y/y) following a 2.7% Q1 decline. Profits rose 7.3% last year. By industry, rest of world earnings rose 4.8% (-3.3% y/y), nonfinancial domestic profits grew 2.8% (7.0% y/y) but financial sector earnings fell 9.1% (+15.2% y/y). After tax profits without IVA & CCA fell 1.4% (+13.3% y/y) after a 6.7% Q1 increase. After tax profits with IVA & CCA rose 1.1% (3.3% y/y) following an 8.6% Q1 decline. 

Inventory building subtracted 0.2 percentage points from last quarter's GDP growth, revised down from the 0.3% addition reported last month. Small subtractions from inventories extend back through last year. Foreign trade deficit improvement added 0.3 percentage points to Q2 growth following the advance estimate of a 0.3 point subtraction. Exports grew at a 6.0% annual rate (4.5% y/y) while imports rose at a 2.9% rate (3.9% y/y).

Domestic demand growth was little revised and remained weak at 1.6% (2.0% y/y). Good weather and low interest rates helped residential investment advance at a downwardly revised 8.9% rate (10.5% y/y). Business fixed investment improved at a lessened 4.2% annual rate (9.9% y/y). Consumer spending grew at a little changed and modest 1.7% rate (2.0% y/y) led by services, up 2.4% (1.4% y/y), and nondurable goods, up 0.5% (0.9% y/y). Durable goods consumption spending fell at a lessened 0.1% rate (+7.5% y/y) led by fewer motor vehicle purchases. Government spending continued to fall, last quarter at a slightly lessened 0.9% annual rate (-2.2% y/y).

Price inflation as measured by the chain-weight price index rose at a moderated and unrevised 1.6% (1.7% y/y) annual rate.

The latest GDP figures can be found in Haver's USECON and USNA databases; USNA contains basically all of the Bureau of Economic Analysis' detail on the national accounts, including the new integrated economics accounts and the recently added GDP data for U.S. Territories. The Consensus estimates can be found in AS1REPNA

 

Chained 2005 $,% AR Q2'12 (2nd Estimate) Q2'12 (Advance) Q1'12 Q4'11 Q2'12
Y/Y
2011 2010 2009
Gross Domestic Product 1.7 1.5 2.0 4.1 2.3 1.8 2.4 -3.1
 Inventory Effect -0.2 0.3 -0.4 2.6 0.2 -0.2 1.5 -0.8
Final Sales 2.0 1.2 2.4 1.5 2.1 2.0 0.9 -2.3
 Foreign Trade Effect 0.3 -0.3 0.2 -0.6 0.1 0.2 -0.4 1.0
Domestic Final Sales 1.6 1.5 2.2 2.1 2.0 1.8 1.3 -3.3
Demand Components
Personal Consumption 1.7 1.5 2.4 2.0 2.0 2.5 1.8 -1.9
Business Fixed Investment 4.2 5.4 7.5 9.5 9.9 8.6 0.7 -18.1
Residential Investment 8.9 9.8 20.6 12.0 10.5 -1.4 -3.1 -22.4
Government Spending -0.9 -1.4 -3.0 -2.2 -2.3 -3.1 0.6 3.7
Chain-Type Price Index
GDP 1.6 1.6 2.0 0.4 1.7 2.1 1.3 0.9
Final Sales of Domestic Product 1.6 1.6 2.0 0.4 1.7 2.1 1.3 0.9
Final Sales to Domestic Purchasers 0.7 0.7 2.5 0.9 1.6 2.5 1.6 -0.2
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