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Economy in Brief

U.S. GDP Growth Improves; Consumer Leads the Advance
by Tom Moeller  July 30, 2015

The Commerce Department estimated that overall economic growth accelerated to 2.3% last quarter (SAAR) versus a 0.6% Q1 increase, revised from -0.2%. It was the quickest rate of growth since Q3 2014 but it missed expectations for a 2.7% rise in the Action Economics Forecast Survey. Economic growth during 2014 was unrevised at 2.4% but growth in 2013 was reduced to 1.5% from 2.2%. Growth in 2012 remained unchanged at 2.3%.

Consumer spending growth improved to 2.9% following deceleration to 1.7% in Q1. Growth in spending on motor vehicles rebounded to 10.5% (4.6% y/y) following a 3.5% decline. Furniture & appliance spending eased to 3.1% (5.1% y/y), the weakest advance since Q1'14. Clothing spending growth recovered to 5.5% (3.6% y/y) following a Q1 decline. Services consumption grew at a 2.1% rate (2.9% y/y), helped by a 6.7% surge (4.9% y/y) in spending at restaurants & hotels.

Capital investment backpedaled at a 0.6% rate, the first decline since Q3'12. The shortfall was paced by a 4.1% drop (+2.1% y/y) in equipment spending, mostly due to a 13.7% decline (-2.1% y/y) in information processing equipment investment. Structures spending eased at a 1.6% rate (-1.7% y/y) but investment in intellectual property products surged 5.5% (6.6% y/y).

Residential investment grew 6.6% (7.5% y/y), the most moderate growth of the last three quarters.

Government consumption & investment improved at a 0.8% rate bolstered by a 2.0% rise (0.8% y/y) in state & local spending. Federal defense expenditures declined at a 1.5% rate (-1.7% y/y) and nondefense spending eased at a 0.6% rate (+1.3% y/y).

Inventory decumulation sapped 0.1 percentage points from GDP growth last quarter. Trade deficit improvement added that amount back as exports rose at a 5.3% rate (1.5% y/y) following a 6.0% decline. Imports grew at a 3.5% annual rate (4.9% y/y), the weakest gain in nine months.

The GDP chain price index advanced at a 2.0% rate (1.0% y/y) following negligible upticks during the prior two quarters. The personal consumption price index advanced 2.2% after two quarters of decline, but the index excluding food & energy gained 1.8% following two quarters of 1.0% rise. The private capital investment price index eased at a 1.1% rate (+0.1% y/y) and the residential investment price index fell 1.5% (+2.4% y/y), the second straight quarter of modest decline.

The latest GDP figures can be found in Haver's USECON and USNA databases; USNA contains virtually all of the Bureau of Economic Analysis' detail in the national accounts, including the integrated economic accounts and the recently added GDP data for U.S. Territories. The Action Economics consensus estimates can be found in AS1REPNA.

Chained 2009 $, %, AR Q2'15 (Initial Estimate) Q1'15 Q4'14 Q2 Y/Y 2014 2013 2012
Gross Domestic Product 2.3 0.6 2.1 2.3 2.4 1.5 2.3
  Inventory Effect -0.1 0.9 -0.0 0.1 0.0 0.1 0.2
Final Sales 2.4 -0.2 2.1 2.2 2.4 1.4 2.1
  Foreign Trade Effect 0.1 -1.9 -0.9 -0.5 -0.1 0.2 0.2
Domestic Final Sales 2.2 1.7 3.0 2.7 2.5 1.2 1.9
Demand Components
Personal Consumption Expenditures 2.9 1.7 4.3 3.1 2.7 1.7 1.5
Business Fixed Investment -0.6 1.6 0.7 2.6 6.2 3.0 9.0
Residential Investment 6.6 10.1 9.9 7.5 1.8 9.5 13.5
Government Spending 0.8 -0.1 -1.4 0.3 -0.6 -2.9 -1.9
Chain-Type Price Index
GDP      2.0 0.1 0.1 1.0 1.6 1.6 1.8
Personal Consumption Expenditures 2.2 -1.9 -0.4 0.2 1.4 1.4 1.8
 Less Food/Energy 1.8 1.0 1.0 1.3 1.5 1.5 1.9
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