US GDP Growth Revised Down to 1.1% in Q2


The US economy expanded an annualized 1.1 percent on quarter in the three months to June of 2016, down from a 1.2 percent growth in the advance estimate. Net trade contribution was lower than anticipated and the fall in inventories was steeper than expected while consumer spending rose at a faster pace, according to the second estimate released by the Bureau of Economic Analysis.

Personal consumption expenditure (PCE) contributed 2.94 percentage points to growth (2.83 percent in the advance estimate) and rose 4.4 percent (4.2 percent in the advance estimate). Spending on both durable goods (9.9 percent compared to 8.4 percent in the advance estimate) and services (3.1 percent compared to 3 percent in the advance estimate) rose more than anticipated while non-durable goods increased slightly less (5.7 percent compared to 6 percent). 

Fixed investment subtracted 0.42 percentage points to growth (-0.52 percent in the advance estimate) and shrank 2.5 percent (-3.2 percent in the advance estimate). Nonresidential investment declined less by 0.9 percent (-2.2 percent in the advance estimate) while residential investment fell faster by 7.7 percent (-6.1 percent in the advance estimate). 

Private inventories subtracted 1.26 percentage points from the growth, compared to a 1.16 percentage points decrease earlier estimated. Businesses lost $12.4 billion worth of inventory, compared to an $8.1 billion loss in the advance estimate. It is the first time since 2011 inventories fell.

Meanwhile, exports increased at a slower 1.2 percent (1.4 percent in the advance estimate) while imports rose 0.3 percent, compared to a 0.4 percent decline in the advance estimate, thus bringing the impact from trade to a smaller 0.1 percent (0.23 percent earlier reported). 

Government spending and investment subtracted 0.27 percentage points to growth, more than -0.23 percent in the advance estimate. It went down 1.5 percent (compared to a 0.9 percent decline earlier estimated). 


BEA | Joana Taborda | joana.taborda@tradingeconomics.com
8/26/2016 2:22:29 PM