Q2 GDP Third Estimate: 1.4 Percent, In Line with Forecasts

Note: My colleague Jill and I were both travelling without Internet when the latest GDP estimate was released. Here is a belated update.

The Third Estimate for Q2 GDP, to one decimal, came in at 1.4 percent, a small increase from the 1.1 percent Second Estimate. The latest number was in the ballpark with most mainstream estimates. Investing.com had posted a consensus of 1.3 percent.

Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release:

Real gross domestic product increased at an annual rate of 1.4 percent in the second quarter of 2016 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.8 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 1.1 percent. With the third estimate for the second quarter, the general picture of economic growth remains the same. The most notable change from the second to third estimate is that nonresidential fixed investment increased in the second quarter; in the previous estimate, nonresidential fixed investment decreased....

Real gross domestic income (GDI) decreased 0.2 percent in the second quarter, in contrast to an increase of 0.8 percent 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 0.6 percent in the second quarter, compared with an increase of 0.8 percent in the first.

The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures (PCE), exports, and nonresidential fixed investment. These were partly offset by negative contributions from private inventory investment, residential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased. [Full Release]

Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was calculated annually. To be more precise, the chart shows is the annualized percent change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We've also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.23% average (arithmetic mean) and the 10-year moving average, currently at 1.32 percent.

Quarterly GDP since 1947

Note: The headline 1.4% real compounded rate of change is 1.41% at two decimal places.

Here is a log-scale chart of real GDP with an exponential regression, which helps us understand growth cycles since the 1947 inception of quarterly GDP. The latest number puts us 15.0% below trend, the largest negative spread in the history of this series, a tiny improvment over the -15.1% in the Second Estimate.

with a Regression

A particularly telling representation of slowing growth in the US economy is the year-over-year rate of change. The average rate at the start of recessions is 3.35%. All eleven recessions over this timeframe have begun at a higher level of real YoY GDP.

Real GDP Year-over-Year

In summary, the Q2 GDP Third Estimate of 1.4 percent was the generally expected upward revision to the Second Estimate of 1.1 percent.

Other GDP updates:

Real GDP Per Capita

Visualizing GDP