US Q2 GDP Growth Revised Lower
The US economy grew by an annualized 2 percent in the second quarter of 2019, slightly below a preliminary estimate of 2.1 percent and following a 3.1 percent expansion in the previous three-month period, the second estimate showed. The revision primarily reflected downward revisions to state and local government spending, exports, private inventory investment, and residential investment that were partly offset by an upward revision to personal consumption expenditures (PCE).
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Positive contributions came from PCE (3.10 percentage points vs preliminary 2.85 percentage points), federal government spending (0.52 pp vs 0.51 pp), and state and local government spending (0.25 pp vs 0.35 pp). These were partly offset by negative contributions from private inventory investment (-0.91 pp vs -0.86 pp), exports (-0.71 pp vs -0.63 pp), residential fixed investment (-0.11 pp vs -0.06 pp), and nonresidential fixed investment (-0.09 pp vs -0.08 pp). Imports, which are a subtraction in the calculation of GDP, increased, posting a negative contribution of 0.01 percentage points.
Personal consumption expenditures (PCE) jumped 4.7 percent in the second quarter, the most since the fourth quarter of 2014, mainly boosted by consumption of goods (8.8 percent vs 1.5 percent in Q1), in particular durable goods (13.0 percent vs 0.3 percent). Also, services consumption growth accelerated to 2.8 percent from 1.0 percent. Federal government spending climbed 8.1 percent (vs 2.2 percent in Q1) and state and local government spending rose 2.3 percent (vs 3.3 percent in Q1).
By contrast, exports plunged 5.8 percent in the second quarter, after a 4.1 percent increase in Q1, due to lower sales of both goods (-5.6 percent vs 4.6 percent) and services (-6.3 percent vs 3.3 percent). On the other hand, imports edged 0.1 percent higher led by purchases of goods (0.3 percent vs -2.8 percent).
Business investment declined for the first time in three years by 0.6 percent, compared to a 4.4 percent advance in the previous three-month period, dragged by a contraction in structures investment (-9.4 percent vs 4.0 percent), which includes oil and gas well drilling. Meanwhile, investment in intellectual property products continued to rise solidly (3.7 percent vs 10.8 percent), and that in equipment rebounded (0.7 percent vs -0.1 percent).
Residential investment shrank for the sixth straight period (-2.9 percent vs -1.0 percent), the first such instance since the financial crisis.