2Q2020 Gross Domestic Product: Second Estimate

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In its second estimate of 2Q2020 gross domestic product (GDP), the Bureau of Economic Analysis (BEA) revised the growth rate of the U.S. economy to a seasonally adjusted and annualized rate (SAAR) of -31.70% (-32.9% expected), up 1.21 percentage points (PP) from the “advance” estimate (“2Qv1”) but -26.74PP from 1Q2020.

As with 2Qv1, two of the four GDP component groupings -- net exports (NetX) and government consumption expenditures (GCE) -- made positive contributions to the headline; however, personal consumption expenditures (PCE) and private domestic investment (PDI) were overwhelmingly negative.

This report contained few material changes. As for details:

PCE. The +0.29PP revision to consumer spending was concentrated in nondurable goods (+0.14PP from 2Qv1) and services (+0.16PP). Whereas revisions were somewhat evenly distributed among the line items in the nondurable goods category, in the services category revisions were overwhelmingly concentrated in healthcare spending.

PDI. This category saw the biggest revision (+0.70PP), of which the majority originated from private inventories (+0.52PP) and nonresidential equipment (+0.11PP).

NetX. Upward revisions to goods exports (+0.18PP) and imports (+0.08PP) strengthened this category by 0.22PP relative to 2Qv1.

GCE. With each line item changing by less than ±$4 billion, this category netted to no change.

The BEA's real final sales of domestic product -- which ignores inventories -- was revised modestly upward (+0.69PP, to a still-alarming -28.24%) to a level 24.62PP below the 1Q estimate. 

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“While the economy has already made some headway toward recovery, the [GDP] figure is an important testament to the sharp economic pain inflicted by the coronavirus pandemic,” wrote senior economist Lydia Boussour of Oxford Economics, “and should motivate policymakers to get their act together to preserve the nascent recovery.”

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.