2Q2019 Gross Domestic Product: Second Estimate

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In its second estimate of 2Q2019 gross domestic product (GDP), the Bureau of Economic Analysis (BEA) shaved the growth rate of the U.S. economy to a seasonally adjusted and annualized rate (SAAR) of +2.04% (2.0% expected), down 0.01 percentage point (PP) from the “advance” estimate (“2Qv1”) and -1.06PP from 1Q2019.

Two of the four GDP component groupings -- personal consumption expenditures (PCE) and government consumption expenditures (GCE) -- contributed to 2Q growth; private domestic investment (PDI) and net exports (NetX) detracted from it.

Although the headline number was essentially unchanged, significant portions of aggregate growth shifted from commercial and governmental activities into the consumer sector. Consumer spending was revised upward by 0.26PP (goods: +0.11PP; services: +0.15PP). Offsetting those improvements, growth rates for spending on fixed commercial investments, inventories, government and exports dropped a combined -0.27pp.

The BEA's real final sales of domestic product was revised modestly upward (+0.04PP, to +2.95%), which is +0.38PP from 1Q. 

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“For the most part, the nearly unchanged headline number reflects the ‘statistical noise’ character of this report,” wrote Consumer Metric Institute’s Rick Davis. “Once again, the deflator being used minimizes the headline number -- simultaneously deflating conspiracy theories about politically motivated tweaking of the underlying assumptions.

“While this is not exactly ‘happy days are here again,’ it is also clearly not doom and gloom. Nor is the U.S. economy -- by itself -- strong enough to pull the global economy out of a global economic funk.

“This may be what an inflection point feels like,” Davis concluded.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.