U.S. 2Q 2013 GDP Up 1.7% vs Revised 1.1% in 1Q

July 31, 2013 05:11 AM
 

via a special arrangement with Informa Economics, Inc.

Historical revisions also released as part of economic data


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


The U.S. economy expanded at 1.7 percent in the second quarter, according to the first estimate of GDP for the period, up from a sharply revised 1Q result of 1.1 percent (1.8 percent previously).

 GDP

A rise in business investment and an upturn in exports helped to propel the economy higher in the second quarter while the gains were somewhat offset by a rise in imports and declines in inventory investment and consumer spending.

On the key area of inflation, personal consumption expenditures (PCE) 1.8 percent in the second quarter, compared with an increase of 2.3 percent in the first. PCE is the category most closely watched by the Fed as a measure of inflation.

Feeding that data included spending on durable goods that increased 6.5 percent after a first quarter reading of 5.8 percent, nondurable goods rose 2.0 percent compared to 2.7 percent while services increased 0.9 percent versus a rise of 1.5 percent in the first quarter.

Personal savings as a percent of disposable personal income in the second quarter was 4.5 percent, compared with 4.0 percent in the first quarter.

Historical revisions were also contained in the report going all the way back to 1929.

Following are highlights of the shifts:

-- For 1929–2012, the average annual growth rate of real GDP was 3.3 percent, 0.1 percentage point higher than in the previously published estimates.  For the more recent period, 2002–2012, growth rate was 1.8 percent, 0.2 percentage point higher than in the previously published estimates.

-- For 2002–2012, the average rate of change in the prices paid by U.S. residents was 2.3 percent, 0.1 percentage point lower than in the previously published estimates.

-- For 2009–2012, the average annual growth rate of real GDP was 2.4 percent, 0.3 percentage point higher than in the previously published estimates.  The percent change in real GDP was revised up 0.1 percentage point for 2010, was unrevised for 2011, and was revised up 0.6 percentage point for 2012.

-- For the period of contraction from the fourth quarter of 2007 to the second quarter of 2009, real GDP decreased at an average annual rate of 2.9 percent; in the previously published estimates, it decreased 3.2 percent.

-- For the period of expansion from the second quarter of 2009 to the first quarter of 2013, real GDP increased at an average annual rate of 2.2 percent; in the previously published estimates, it increased 2.1 percent.

There was a combination of statistical and definition shifts that contributed to the revisions published today. The BEA said, "In the aggregate, changes in definitions (mainly the recognition of new forms of fixed investment) have the largest effect on current-dollar GDP and GDI for 1929–2012, and statistical changes (improved data and methodologies) tend to have smaller effects.  For example, for 2012, the level of current-dollar GDP was revised up $559.8 billion; $526.0 billion of this upward revision resulted from definitional changes."


Comments: There’s obviously a lot to digest here. But the headline number that will get attention is the second quarter performance of 1.7 percent after the rise of just 1.1 percent in the first quarter, which had previously be put at 1.8 percent. The shifts that were undertaken to include research and development, and entertainment and the arts into the mix did help boost the second quarter reading. Also, PCE expenditures remain controlled, so that shouldn’t be a worry point for the Fed.

On the historical side, the revisions did provide some additional clarity to the economic downturn in that the swoon was not as deep as previously stated. That’s small comfort since GDP still fell nearly 3 percent in the period from 4Q 2007 to 2Q 2009.


 

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


 


 

 

 

 

Back to news


Comments

 
Spell Check

No comments have been posted to this News Article

Corn College TV Education Series

2014_Team_Shot_with_Logo

Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!

Markets

Market Data provided by QTInfo.com
Brought to you by Beyer
Close