Global| Sep 29 2016U.S. GDP Growth Increase Revised Up; Business Investment Grew
by:Tom Moeller
|in:Economy in Brief
Summary
Economic growth during Q2'16 was revised higher to 1.4% (SAAR, 1.3% y/y) from 1.1% estimated last month and 1.2% in the advance report. A 0.8% gain had been expected in the Action Economic Forecast Survey. Business fixed investment [...]
Economic growth during Q2'16 was revised higher to 1.4% (SAAR, 1.3% y/y) from 1.1% estimated last month and 1.2% in the advance report. A 0.8% gain had been expected in the Action Economic Forecast Survey.
Business fixed investment increased at a 1.0% rate (-0.5% y/y), revised from a 0.9% decline. Structures outlays declined 2.1% (-5.6% y/y), revised from -8.4%. Equipment outlays declined 3.0% (-1.7% y/y), revised from -3.7%. Industrial equipment outlays grew 9.5% (2.5% y/y), revised from 9.1%. Information processing equipment dropped at an unchanged rate of 4.9% (+4.1% y/y). Intellectual property product spending gained 10.4% (5.9% y/y), revised from 8.6%.
The increase in consumer spending was little changed at 4.3% (2.7% y/y). It was the strongest increase since Q4'14. Durable goods purchases jumped at a 9.8% rate (4.8% y/y). Nondurable goods spending gained 5.7% (3.0% y/y). In the services sector, spending increased 3.0% (2.3% y/y).
Residential investment fell at a 7.8% annual rate (+5.7% y/y), an estimate that was little changed and the first decline since Q1'14.
Government purchases declined at a 1.7% annual rate (+0.7% y/y), revised from -1.5%. State & local buying fell 2.5% (+0.7% y/y). Federal government purchases eased 0.4% (+0.7% y/y) as defense spending dropped 3.2% (-0.8% y/y), the same as in Q1.
Inventory investment subtracted a slightly lessened 1.2 percentage points from economic growth. It remained the largest of five consecutive quarterly reductions. The foreign trade sector added a slightly increased 0.2 percentage points to overall economic growth. Exports grew 1.8% (-1.1% y/y) while imports improved 0.2% (0.3% y/y).
The revision was accompanied by the second report on after-tax corporate earnings which showed a 5.6% rise (-1.7% y/y), revised from 4.9%. It was the second consecutive quarter of firm increase. Profits with IVA & CCA adjustments eased 0.6% (-4.3% y/y) as nonfinancial industry earnings declined 4.6% (-7.5% y/y). Foreign sector profits jumped 10.3% (6.5% y/y) while financial sector earnings improved 1.3% (-4.7% y/y).
The GDP price index increased at a 2.3% rate (1.2% y/y), which was revised up minimally. The personal consumption price index increased 2.0% (1.0% y/y), and excluding food & beverages, it rose 1.8% (1.6% y/y). The nonresidential investment price index increased 1.2% (0.5% y/y), while the residential investment price index jumped 5.8% (3.2% y/y). The government sector price index increased 2.7% (0.7% 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, 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) | Q2'16 (3rd Estimate) | Q2'16 (2nd Estimate) | Q2'16 (Advance Estimate) | Q1'16 | Q4'15 | Q2'16 Y/Y | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|---|---|
| Gross Domestic Product | 1.4 | 1.1 | 1.2 | 0.8 | 0.9 | 1.3 | 2.6 | 2.4 | 1.7 |
| Inventory Effect | -1.2 | -1.3 | -1.2 | -0.4 | -0.4 | -0.7 | 0.2 | 0.0 | 0.2 |
| Final Sales | 2.6 | 2.4 | 2.4 | 1.3 | 1.2 | 1.9 | 2.4 | 2.5 | 1.5 |
| Foreign Trade Effect | 0.2 | 0.1 | 0.2 | 0.0 | -0.5 | -0.1 | -0.7 | -0.1 | 0.3 |
| Domestic Final Sales | 2.4 | 2.2 | 2.1 | 1.2 | 1.7 | 2.1 | 3.1 | 2.6 | 1.2 |
| Demand Components | |||||||||
| Personal Consumption Expenditures | 4.3 | 4.4 | 4.2 | 1.6 | 2.3 | 2.7 | 3.2 | 2.9 | 1.5 |
| Business Fixed Investment | 1.0 | -0.9 | -2.2 | -3.4 | -3.3 | -0.5 | 2.1 | 6.0 | 3.5 |
| Residential Investment | -7.8 | -7.7 | -6.1 | 7.8 | 11.5 | 5.7 | 11.7 | 3.5 | 11.9 |
| Government Spending | -1.7 | -1.5 | -0.9 | 1.6 | 0.1 | 0.7 | 1.8 | -0.9 | -2.9 |
| Chain-Type Price Index | |||||||||
| GDP | 2.3 | 2.3 | 2.2 | 0.5 | 0.8 | 1.2 | 1.1 | 1.8 | 1.6 |
| Personal Consumption Expenditures | 2.0 | 2.0 | 1.9 | 0.3 | 0.4 | 1.0 | 0.3 | 1.5 | 1.3 |
| Less Food/Energy | 1.8 | 1.8 | 1.7 | 2.1 | 1.2 | 1.6 | 1.4 | 1.6 | 1.5 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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