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Economy in Brief

U.S. GDP Growth Is Unrevised in Q2'22, Posting Second Straight Quarterly Decline
by Tom Moeller  September 29, 2022

• Consumer spending revised slightly higher.

• Business spending revised lower.

• Corporate profits increased modestly.

• Price index raised.

Real GDP growth during Q2'22 was unrevised at -0.6% (+1.8% y/y) after declining an unrevised 1.6% in Q1. The latest figure matched expectations in the Action Economics Forecast Survey. GDP increased at a 2.1% annual rate from 2016 to 2021, up 0.2 percentage points from the earlier estimate.

The Q2 gain in corporate profits after-tax was revised up to 7.4% (7.7% y/y) from 6.1%. Domestic nonfinancial profits rose 7.9% (9.8% y/y). Financial sector earnings declined 9.0% (-10.2% y/y) while foreign sector profits rose 5.8% (21.8% y/y).

Real personal consumption expenditure growth last quarter was revised up to 2.0% (2.4% y/y) from 1.5%. Durable goods outlays fell 2.8% (-3.7% y/y) while nondurable spending declined 2.4% (-1.1% y/y). Services outlays rose 4.6% (4.8% y/y). Business fixed investment growth was revised lower to 0.1% (2.4% y/y). Residential investment declined 17.8% (-7.2% y/y), revised from -16.2%.

Government spending fell 1.6% (-1.3% y/y) last quarter, revised from -1.8%. Federal government spending declined 3.4% (-4.0% y/y), revised from -1.9%. Defense spending rose 1.5% (-3.9% y/y). State & local government spending weakened 0.6% (+0.5% y/y).

The contribution of inventory investment was revised minimally to a 1.9 percentage point subtraction from GDP growth. The narrowing of the foreign trade deficit added 1.2 percentage points to GDP growth, revised from 1.4 percentage points. Exports grew 13.8% (7.3% y/y) while imports rose 2.3% (11.2% y/y).

The GDP price index was revised higher to 9.0% (7.6% y/y) from 8.9%. This remained the fastest pace of GDP price inflation since Q1'81. The Action Economics Forecast Survey expected no revision. The rise in the PCE price Index was revised to 7.3% (6.6% y/y) from 7.1%. The PCE price index less food & energy increased 4.7% (5.0% y/y), revised from 4.4%, and has risen at about that rate for roughly a year. The nonresidential price index rose 8.5% (6.9% y/y), the largest quarterly increase since Q2'81. The residential investment price index rose 15.2%, both q/q and y/y, revised from a 15.3% gain. The government spending price index rose 11.6% (8.3% y/y), revised from 12.4%.

The 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. Both databases include tables of the newly published not seasonally adjusted data. The Action Economics consensus estimates can be found in AS1REPNA.

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