Thursday’s economic numbers brought a revision to the second quarter gross domestic product (GDP). While the number was expected to increase, it rose even more than anticipated. The prior 2.3% preliminary report was revised up to 3.7%, much higher than the 3.2% that Bloomberg had projected. What stood out about this revised GDP reading is that it even beat the highest official economist target of 3.6%.
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Consumer demand was strong in the report, as personal consumption rose by 3.1% after durables rose by 8.2%, based on strong auto sales. Residential investment was up by 7.8% and non-residential fixed investment rose by 3.2%. Inventories and net exports also contributed to the gains, and final demand rose by 3.5%.
Current-dollar GDP, which is the market value of the goods and services produced by the economy and backing out the value of goods and services used up in production, rose by 5.9%. That gain was up $252.7 billion to an annualized level of $17.902 trillion. In the first quarter, current-dollar GDP increased by 0.8%, or $33.3 billion.
What really stands out about this higher report is not that it is a revision that is irrelevant. Its strength was back-end loaded from stronger data that came in during late-May and into June. That would lead some economists to believe that there is a better-than-expected momentum that came into the third quarter that may act as a small buffer against some of the recent weakness and panic coming out of Asia.
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The Bureau of Economic Analysis further said:
Real gross domestic income (GDI) — the value of the costs incurred and the incomes earned in the production of goods and services in the nation’s economy — increased 0.6 percent in the second quarter, compared with an increase of 0.4 percent (revised) in the first. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.1 percent in the second quarter, compared with an increase of 0.5 percent in the first quarter.
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