2Q2021 Gross Domestic Product: Second Estimate

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In its second estimate of 2Q2021 gross domestic product (GDP), the Bureau of Economic Analysis (BEA) edged up the growth rate of the U.S. economy to a seasonally adjusted and annualized rate (SAAR) of +6.56% (+6.6% expected), up 0.06 percentage point (PP) from the “advance” estimate (“2Qv1”) and +0.28PP from 1Q2021.

As with 2Qv1, personal consumption expenditures (PCE) was the only grouping of GDP components driving the expansion. Private domestic investment (PDI), net exports (NetX) and government consumption expenditures (GCE) made minor negative offsets. As for details:

PCE. Contribution to 2Q headline: +7.80PP; +0.36PP from 1Q and +0.02PP from 2Qv1. Broad-based upward revisions to consumer spending on goods ($15.4 billion, nominal) were largely offset by downward revisions to spending on services (-12.1B). Housing and utilities (-$5.4B), health care (+$11.3B), other services (-$9.0B), and receipts from sales of goods and services by nonprofit institutions (-$15.8B) -- which do not have market-derived value -- were the “movers and shakers” in the service-spending category.

PDI. Contribution to 2Q headline: -0.67PP; -0.30PP from 1Q and -0.10PP from 2Qv1. Upward revisions to intellectual property products (+$8.9B) were overcome by downward revisions to residential investment (-$3.5B) and nonfarm inventories (-$7.5B).

NetX. Contribution to 2Q headline: -0.24PP; +1.32PP from 1Q and +0.20PP from 2Qv1. A downward revision to goods imports (-$11.7B) dominated NetX; recall that imports are inversely correlated with the GDP headline.

GCE. Contribution to 2Q headline: -0.33PP; -1.10PP from 1Q and -0.06PP from 2Qv1. A downward revision to gross investment by state and local governments (-$2.0B) dominated this category.

The BEA's real final sales of domestic product -- which ignores inventories -- was revised to +7.86% (+0.23PP), a level 1.04PP below the 1Q estimate. 

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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.