Recent Updates

  • US: New Residential Construction (Oct)
  • Kuwait: PPI (Q3)
  • Israel: IP (Sep)
  • Turkey: Non-Domestic PPI (Oct)
  • Germany: Producer Price Indexes (Oct), Migration (Jun)
  • Taiwan: Export Orders (Oct), External Debt, BOP (Q3)
  • GERMANR: Building Permits by State (Sep)
  • France: Labor Force Survey (Q3), Central Government Negotiable Debt, Imported Raw Materials Prices (Oct)
  • more updates...

Economy in Brief

U.S. GDP Growth Revised Up; Profits Strengthen
by Tom Moeller  August 29, 2018

Real gross domestic product grew 4.2% (AR) during Q2'18 (2.9% y/y), revised higher from 4.1% reported initially. It remained the strongest increase since Q3'14. A 4.0% gain had been expected in the Action Economics Forecast Survey. The GDP price index increased an unrevised and expected 3.0% (2.4% y/y). It was the strongest gain since Q3'08.

After tax corporate profits increased 3.7% (6.7% y/y) following an 8.5% rise. The 12.4% six-month increase was the strongest since Q1 2012. Pretax profits increased 3.3% (7.7% y/y), the strongest rise in four years. Earnings in the nonfinancial sector grew an improved 5.1% (6.6% y/y). Financial sector profits increased 3.8% (19.2% y/y) but foreign sector earnings fell 1.7% (+4.1% y/y).

Personal consumption expenditures strengthened 3.8% (2.6% y/y), revised from 4.0%. They were led by an 8.6% surge (6.6% y/y) in spending on durable goods. Motor vehicle expenditures gained a lessened 6.7% (4.2% y/y) but purchases of recreational goods & vehicles surged an upwardly revised 9.3% (7.7% y/y). Spending on furniture & appliance spending improved 6.1% (7.1% y/y). Nondurable goods buying advanced 3.7% (2.5% y/y). Clothing purchases strengthened 8.9% (3.0% y/y) and food & beverage spending rose 2.8% (3.5% y/y). Gasoline & fuel oil purchases increased 2.3% (-1.4% y/y). Outlays on services gained 3.1% (2.0% y/y) led by an 8.4% rise (2.7% y/y) in restaurant & accommodations outlays. Medical care outlays increased 2.2% (2.8% y/y) and recreation spending gained 3.3% (0.3% y/y). Spending on housing & utilities improved 2.5% (1.4% y/y).

Nonresidential investment increased a strengthened 8.5% (7.0% y/y) led by a 13.2% jump (5.3% y/y) in structures outlays. Equipment investment rose 4.4% (8.1% y/y), paced by a 10.8% jump (10.5% y/y) in information processing equipment. Intellectual property products investment improved an upwardly revised 11.0% (6.7% y/y), following a 14.1% surge during Q1. Outlays on industrial equipment fell 3.5% (+3.8% y/y).

Residential investment declined 1.6% (+1.3% y/y), down for the fourth quarter in the last five.

Government sector outlays increased 2.4% (1.3% y/y) led by a 3.7% rise (2.3% y/y) in federal government purchases. National defense spending strengthened 6.0% (2.2% y/y), the largest quarterly rise in nine years. State & local government spending increased 1.6% (0.7% y/y).

Improvement in the foreign trade deficit added an improved 1.2 percentage points to GDP growth last quarter. Exports surged 9.1% (5.7% y/y) while imports edged 0.4% lower (+4.4% y/y). The change in inventories subtracted 1.0 percentage point from growth.

The chained GDP price index increased an unchanged 3.0% (2.4% y/y). The residential investment price index surged 7.3% (6.0% y/y). The PCE price index increased 1.9% (2.2% y/y) and the business fixed investment price index rose 1.9% (1.2% y/y). The export price index strengthened 5.2% after a 0.2% improvement.

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.

Information in the Yield Curve about Future Recessions from the Federal Reserve Bank of San Francisco can be found here.

Chained 2012 $ (%, AR) Q2'18 (Second Estimate) Q2'18 (Advance Estimate) Q1'18 Q4'17 Q2'18 Y/Y 2017 2016 2015
Gross Domestic Product 4.2 4.1 2.2 2.3 2.9 2.2 1.6 2.9
  Inventory Effect -1.0 -1.0 0.3 -0.9 -0.2 -0.1 -0.5 0.3
Final Sales 5.3 5.1 1.9 3.2 3.0 2.2 2.1 2.6
  Foreign Trade Effect 1.2 1.1 0.0 -0.9 0.1 -0.3 -0.2 -0.7
Domestic Final Sales 3.9 3.9 1.9 4.0 2.9 2.5 2.3 3.3
Demand Components
  Personal Consumption Expenditure 3.8 4.0 0.5 3.9 2.6 2.5 2.7 3.7
  Nonresidential Business Fixed Investment 8.5 7.4 11.5 4.9 7.0 5.3 0.5 1.8
  Residential Investment -1.6 -1.1 -3.4 11.2 1.3 3.3 6.5 10.1
  Government Spending 2.4 2.1 1.5 2.4 1.3 -0.1 1.4 1.9
Chain-Type Price Index
   GDP 3.0 3.0 2.0 2.5 2.4 1.9 1.1 1.0
    Personal Consumption Expenditures 1.9 1.8 2.5 2.7 2.2 1.8 1.1 0.3
    Nonresidential Investment 1.9 2.0 0.7 0.7 1.2 0.7 -0.8 0.5
    Residential Investment 7.3 7.5 8.8 3.1 6.0 4.5 3.6 2.7
close
large image