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Economy in Brief

U.S. GDP Growth Is Lower Due To Drought Effect
by Tom Moeller  September 27, 2012

Last quarter's real GDP growth was unexpectedly revised lower to a 1.3% annual rate following the second estimate of 1.7% growth. Growth was expected to be little-changed. The revision reflected a 0.2 percentage point subtraction from growth due to lower farm inventories. Domestic demand growth also was revised down slightly to 1.4% from 1.6%.

Growth in corporate profits with IVA & CCA for Q2 was revised up slightly to 1.1% (6.7% y/y) following a 2.7% Q1 decline. Profits rose 7.3% last year. After tax profits without IVA & CCA fell 0.8% (+14.6% y/y) after a 9.7% Q1 increase. After tax profits with IVA & CCA rose 2.2% (4.4% y/y) following an 8.6% Q1 decline. 

Inventory building subtracted 0.5 percentage points from last quarter's GDP growth, revised down from -0.2% reported last month. Foreign trade deficit improvement was little-revised and added 0.2 percentage points to Q2 growth. Exports grew at a lessened 5.2% annual rate (4.3% y/y) while imports rose at a 2.8% rate (3.9% y/y).

Domestic demand growth was lowered to 1.4% (2.0% y/y). Good weather and low interest rates helped residential investment advance at a downwardly revised 8.4% rate (10.4% y/y). Business fixed investment improved at a lessened 3.6% annual rate (9.7% y/y) while consumer spending grew at an easier 1.5% rate (2.0% y/y). Government spending continued to fall, last quarter at a slightly lessened 0.7% 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 (3rd Est) Q2'12 (2nd Est) Q2'12 (Advance) Q1'12 Q4'11 Q2'12
Y/Y
2011 2010 2009
Gross Domestic Product 1.3 1.7 1.5 2.0 4.1 2.1 1.8 2.4 -3.1
 Inventory Effect -0.5 -0.2 0.3 -0.4 2.6 0.1 -0.2 1.5 -0.8
Final Sales 1.7 2.0 1.2 2.4 1.5 2.0 2.0 0.9 -2.3
 Foreign Trade Effect 0.2 0.3 -0.3 0.2 -0.6 0.0 0.2 -0.4 1.0
Domestic Final Sales 1.4 1.6 1.5 2.2 2.1 2.0 1.8 1.3 -3.3
Demand Components
Personal Consumption 1.5 1.7 1.5 2.4 2.0 1.9 2.5 1.8 -1.9
Business Fixed Investment 3.6 4.2 5.4 7.5 9.5 9.7 8.6 0.7 -18.1
Residential Investment 8.4 8.9 9.8 20.6 12.0 10.4 -1.4 -3.1 -22.4
Government Spending -0.7 -0.9 -1.4 -3.0 -2.2 -2.2 -3.1 0.6 3.7
Chain-Type Price Index
GDP 1.6 1.6 1.6 2.0 0.4 1.7 2.1 1.3 0.9
Final Sales of Domestic Product 1.5 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 0.7 2.5 0.9 1.6 2.5 1.6 -0.2
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