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Politics & MoneyInvestments

GDP growth even stronger than last quarter

But gross domestic income slowed considerably

Real gross domestic product increased at an annual rate of 4.2% in the second quarter of 2018, according to the revised, second estimate released by the U.S. Bureau of Economic Analysis.

Today's second quarter revised GDP estimate is based on more complete source data than was available for the advance estimate issued last month, when GDP was estimated at 4.1%.

The chart below shows GDP is now up two percentage points from the preceding quarter, as well as more than one percentage point from the second quarter of 2017.

GDP Aug

(Source: BEA)

Real gross domestic income growth slowed, increasing only 1.8% in the second quarter, down from an increase of 3.9% in the first quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weighs GDP and GDI, increased 3% in the second quarter, decreasing 3.1% from the first quarter.

The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures, exports, nonresidential fixed investment, federal government spending, and state and local government spending.  

These were partly offset by negative contributions from private inventory investment and residential fixed investment. Notably, imports also decreased.

An update to GDP released by BEA shows that the second quarter real GDP was revised up 0.1 percentage point from the first estimate, which reflects upward revisions to private inventory investment, nonresidential fixed investment, and federal government spending and local government spending that were partly offset by downward revisions to PCE and residential fixed investment.

Here are updates to the previous estimate:

Real GDP: Increased to 4.2%, up from last estimate’s 4.1%

Current-dollar GDP: Increased to 7.6%, up from last estimate’s 7.4%

Real GDI: Came in at 1.8%

Average of Real GDP and Real GDI: Came in at 3%

Gross domestic purchases price index:  Remained unchanged at 2.3% at the second estimate

Personal consumption expenditures: Increased to 1.9%, up from last estimate’s 1.8%

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