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Q2 GDP Advance Estimate at 2.3%, Close to Mainstream Forecasts

July 30, 2015

by Doug Short

The Advance Estimate for Q2 GDP, to one decimal, came in at 2.3 percent, a substantial increase from the 0.6 percent of Q1, which is an upward revision from -0.2 percent prior to today's annual revisions. Today's number came in a tad on the light side of most mainstream estimates. The WSJ survey of economists had median and mean forecasts of 2.6 and 2.7, respectively. Investing.com was looking for 2.6. The Atlanta Fed's GDPNow was closer with their forecast of 2.4.

Here is an excerpt from the Bureau of Economic Analysis news release:

Real gross domestic product -- the value of the production of goods and services in the United States, adjusted for price changes -- increased at an annual rate of 2.3 percent in the second quarter of 2015, according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.6 percent (revised).

The Bureau emphasized that the second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3 and "Comparisons of Revisions to GDP" on page 10). The "second" estimate for the second quarter, based on more complete data, will be released on August 27, 2015.

The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures (PCE), exports, state and local government spending, and residential fixed investment that were partly offset by negative contributions from federal government spending, private inventory investment, 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 3.24% average (arithmetic mean) and the 10-year moving average, currently at 1.42 percent.

Quarterly GDP since 1947

Note: The headline 2.3% GDP is 2.32% 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 14.6% below trend, the largest negative spread in the history of this series.

with a Regression

A particularly telling representation of slowing growth in the US economy is the year-over-year rate of change.

Real GDP Year-over-Year

In summary, the Q2 GDP Advance Estimate of 2.3 percent was close to mainstream estimates and a welcome improvement over Q1.

Other GDP updates:

Real GDP Per Capita

Visualizing GDP