Real Gross Domestic Product, that is, the value of everything a nation produces, increased in the second quarter at a slightly higher rate than previous estimates predicted.
GDP increased at an annual rate of 1.4% in the second quarter, according to the third estimate released by the U.S. Bureau of Economic Analysis.
This is up from the first quarter, when real GDP increased 0.8%, and the second estimate for this quarter when it increased 1.1%.
While this data is based on a more complete source of data than was available for the second estimate last month, the only substantial change was in nonresidential fixed investment, which showed an increase.
Click to Enlarge
(Source: U.S. Bureau of Economic Analysis)
If economists were not happy about the number before, there is little hope they are impressed with the new estimate, which is just 0.2% above the first estimate. About the first estimated increase of 1.2% in the second quarter, Capital Economics Chief Economist Paul Ashworth said:
“The disappointing 1.2% annualized gain in second-quarter GDP growth, combined with the downward revisions to gains in the preceding two quarters, make a September interest rate hike much less likely.”
So how does he feel about the third prediction?
"Second-quarter GDP growth was revised up to 1.4% annualised, from 1.1%, but that still means GDP growth averaged little more than 1% annualised over the first half of this year," Ashworth said.
The increase was due to positive contributions from personal consumption expenditures, exports and nonresidential investment, but was offset by a decrease in negative contributions from private inventory investment, residential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The current dollar GDP increased 3.7%, or $168.5 billion, in the second quarter to a total of $18,450.1 billion. This is up from the first quarter’s increase of 1.3% or $58.8 billion.
Many will look to GDP as they determine the right course for raising interest rates which could come in December, however according to a blogger for one of largest online investment communities GPD is pretty much overrated.
