The U.S. Department of Commerce’s Bureau of Economic Analysis delivered a better-than-expected growth second estimate of gross domestic product (GDP) for the second quarter of 2017. Real GDP increased at an annualized rate of 3.0% in the second quarter of 2017. This compares with a 1.2% gain in the first quarter of the year. A final (third) estimate will not come until late September.
Bloomberg was projecting a gain of 2.8% in second-quarter GDP, and this 3.0% actual report was at the top of a 2.5% to 3.0% range in Bloomberg’s Econoday forecast.
The GDP price index rose by 1.0%, the consensus estimate expected by Bloomberg. That’s still well under the Federal Reserve’s desired inflation rate in a range of 2.0% to 2.5%.
Rising consumer spending, nonresidential fixed investment, exports, federal spending and private inventory investment drove the GDP increase in the second quarter. Lower residential fixed investment and lower spending at the state and local government levels partially offset the gains.
Looking at some of the price index details, spending on durable goods rose by 0.65% in the second quarter, a sharp increase from a drop of 0.01% in the first quarter. Spending on clothing and footwear rose by 0.21% compared to a drop of 0.08% in the first quarter.
Nonfarm inventories rose by 0.15%, compared with a drop of 1.59% in the prior quarter, while exports rose by just 0.45%, compared with an increase of 0.85% in the first quarter. Imports declined by 0.23%, compared with a decline of 0.63% in the prior quarter
Real gross domestic income (GDI) growth for the second quarter came in at 2.9%. For the first quarter of 2017, the percentage change in real GDI was revised from 2.6% to 2.7%.
In early trading on Wednesday, the S&P 500 traded up less than 0.1% at 2,448.58 and the DJIA also traded down less than 0.1% at 21,858.52.