An Inside Look at the Q2 2023 GDP Second Estimate

Real gross domestic product (GDP) is comprised of four major subcomponents: personal consumption expenditures, gross private domestic investment, net exports, and government consumption expenditures. In the latest Q2 2023 second estimate update it was reported that real GDP increased at an annual rate of 2.1%. Three out of the four components made positive contributions and one component made negative contributions.

Last 4 quarters contributions to GDP Percent Change

Personal consumption expenditures (PCE) contributed 1.14, government consumption expenditures (GCE) contributed 0.58, and gross private domestic investment (GPDI) contributed 0.57 to the Q2 real GDP. Net exports of goods and services (NEGS) was the sole negative contributor in Q2 at -0.22.

Over time, the personal consumption expenditures (PCE) component has shown the most consistent correlation with real GDP. When PCE has been positive, GDP has usually been positive, and vice versa (although this was not the case in Q1 and Q2 2022).