US GDP Growth Slows Less than Forecast in Q2

The US economy grew by an annualized 2.1 percent in the second quarter of 2019, beating market expectations of 1.8 percent and following a 3.1 percent expansion in the previous three-month period, the advance estimate showed. Household consumption and government spending increased at faster rates, while a slump in exports and a smaller inventory build made a negative contribution to growth.

Positive contributions from personal consumption expenditures (2.85 percentage points), federal government spending (0.51 percentage points), and state and local government spending (0.35 percentage points) were partly offset by negative contributions from private inventory investment (-0.86 percentage points), exports (-0.63 percentage points), nonresidential fixed investment (-0.08 percentage points) and residential fixed investment (-0.06 percentage points). Imports, which are a subtraction in the calculation of GDP, increased, posting a negative contribution of 0.01 percentage points.

Personal consumption expenditures (PCE) jumped 4.3 percent in the second quarter, the most since the fourth quarter of 2017, mainly boosted by consumption of goods (8.3 percent vs 1.5 percent in Q1), in particular durable goods (12.9 percent vs 0.3 percent). Also, services consumption growth accelerated (2.5 percent vs 1 percent). Federal government spending climbed 7.9 percent (vs 2.2 percent in Q1) and state and local government spending rose 3.2 percent (vs 3.3 percent in Q1).

By contrast, exports plunged 5.2 percent in the second quarter, after a 4.1 percent increase in Q1, due to lower sales of both goods (-5 percent vs 4.6 percent) and services (-5.6 percent vs 3.3 percent). On the other hand, imports edged 0.1 percent higher led by purchases of goods (0.2 percent vs -2.8 percent).

Business investment declined for the first time in three years by 0.6 percent, compared to a 4.4 percent advance in the previous three-month period, dragged by a contraction in structures investment (-10.6 percent vs 4 percent), which includes oil and gas well drilling. Meanwhile, investment in intellectual property products continued to rise solidly (4.7 percent vs 10.8 percent), and that in equipment rebounded (0.7 percent vs -0.1 percent).

Residential investment shrank for the sixth straight period (-1.5 percent vs -1 percent), the first such instance since the financial crisis.

US GDP Growth Slows Less than Forecast in Q2

BEA | Joana Ferreira |
7/26/2019 1:18:48 PM