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Economy in Brief

U.S. GDP Growth Accelerates
by Tom Moeller  July 27, 2018

Real gross domestic product grew 4.1% at an annual rate during Q2'18 (2.8% y/y) following a 2.2% rise during Q1, upwardly revised from 2.0%. It was the strongest increase since Q3'14. The increase matched expectations in the Action Economics Forecast Survey. The GDP price index increased 3.0% (2.4% y/y). It was the strongest gain since Q3'08. A 2.3% rise had been expected. This release included comprehensive revisions by the Bureau of Economic Analysis to the GDP series and data, some all the way back to 1929.

Personal consumption expenditures surged 4.0% (2.7% y/y) in Q2, the strongest increase since Q4'14. It was led by a 9.3% surge (6.8% y/y) in spending on durable goods. Motor vehicle buying gained 8.4% (4.6% y/y) and purchases of recreational goods & vehicles surged 8.7% (7.5% y/y). Furniture & appliance spending improved 7.0% (7.3% y/y). Nondurable goods buying advanced 4.2% (2.6% y/y). Clothing purchases strengthened 8.7% (2.9% y/y) and food & beverage spending rose 2.5% (3.5% y/y). Gasoline & fuel oil purchases rose 3.0% (-1.2% y/y). Outlays on services advanced 3.1% (2.0% y/y) led by a 7.1% rise (2.4% y/y) in restaurant & accommodations outlays. Medical care outlays rose 3.5% (3.1% y/y) and recreation spending gained 2.9% (0.2% y/y). Spending on housing & utilities rose 2.4% (1.3% y/y).

Capital spending increased 7.4% (6.7% y/y) led by a 13.3% jump (5.3% y/y) in structures outlays. Equipment investment rose 3.9% (8.0% y/y), paced by a 12.3% jump (10.9% y/y) in information processing equipment. Intellectual property products investment improved 8.2% (6.0% y/y) but outlays on industrial equipment declined 5.3% (+3.3% y/y).

Residential investment eased 1.1% (+1.4% y/y), down for the fourth quarter in the last five.

Government sector outlays increased 2.1% (1.2% y/y) led by a 3.5% gain (2.2% y/y) in outlays by the federal government. National defense spending strengthened 5.5% (2.1% y/y). State & local government spending increased 1.4% (0.7% y/y).

Improvement in the foreign trade deficit added 1.1 percentage points to GDP growth last quarter. Exports surged 9.3% (5.7% y/y) while imports nudged 0.5% higher (4.4% y/y). The change in inventories subtracted 1.0 percentage point from growth.

The chained GDP price index increased 3.0% (2.4% y/y). The residential investment price index surged 7.5% (6.0% y/y). The PCE price index increased 1.8% (2.2% y/y) and the business fixed investment price index rose 2.0% (1.2% y/y). The export price index surged 5.8% (4.9% y/y).

The GDP figures can be found in Haver's USECON and USNA database. USNA contains virtually all of the Bureau of Economic Analysis' detail in the national accounts. Both databases include tables of the newly published not seasonally adjusted data. The Action Economics consensus estimates can be found in AS1REPNA.

Preview of the 2018 Comprehensive Update of the National Income and Product Accounts from the Bureau of Economic Analysis is available here.

Chained 2012 $ (%, AR) Q2'18 (Advance Estimate) Q1'18 Q4'17 Q2'18 Y/Y 2017 2016 2015
Gross Domestic Product 4.1 2.2 2.3 2.8 2.2 1.6 2.9
  Inventory Effect -1.0 0.3 -0.9 -0.2 -0.1 -0.5 0.3
Final Sales 5.1 1.9 3.2 3.0 2.2 2.1 2.6
  Foreign Trade Effect 1.1 0.0 -0.9 0.1 -0.3 -0.2 -0.7
Domestic Final Sales 3.9 1.9 4.0 2.9 2.5 2.3 3.3
Demand Components
  Personal Consumption Expenditure 4.0 0.5 3.9 2.7 2.5 2.7 3.7
  Business Fixed Investment 7.4 11.5 4.9 6.7 5.3 0.5 1.8
  Residential Investment -1.1 -3.4 11.2 1.4 3.3 6.5 10.1
  Government Spending 2.1 1.5 2.4 1.2 -0.1 1.4 1.9
Chain-Type Price Index
   GDP 3.0 2.0 2.5 2.4 1.9 1.1 1.0
    Personal Consumption Expenditures 1.8 2.5 2.7 2.2 1.8 1.1 0.3
    Nonresidential Investment 2.0 0.7 0.7 1.2 0.7 -0.8 0.5
    Residential Investment 7.5 8.8 3.1 6.0 4.5 3.6 2.7
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