Q2 GDP Second Estimate: 1.1 Percent, As Expected
August 26, 2016
by Doug Short
The Second Estimate for Q2 GDP, to one decimal, came in at 1.1 percent, a slight decrease from the 1.2 percent Advance Estimate. Today's number was in line with most mainstream estimates, with Investing.com posting a consensus of 1.1 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 1.1 percent in the second quarter of 2016, according to the "second" 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 "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 1.2 percent. With this second estimate for the second quarter, the general picture of economic growth remains the same; revisions to the components of GDP are small.
Real gross domestic income (GDI) increased 0.2 percent in the second quarter, compared with an increase of 0.8 percent in the first (revised). 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 primarily reflected positive contributions from personal consumption expenditures (PCE) and exports that were partly offset by negative contributions from private inventory investment, residential fixed investment, state and local government spending and nonresidential fixed investment. 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 3.22% average (arithmetic mean) and the 10-year moving average, currently at 1.31 percent.
Note: The headline 1.1% real compounded rate of change is 1.10% (unchanged) 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 15.1% below trend, the largest negative spread in the history of this series, a bit wider than the -15.0% in the Advance Estimate.
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.
In summary, the Q2 GDP Second Estimate of 1.1 percent was the generally expected small downward revision to the Advance Estimate of 1.2 percent.
Other GDP updates: