US second-quarter growth revised up to a 2.2 per cent annualised rate
The US Bureau of Economic Analysis raised its estimate of annualised real growth in the second quarter from 1.5 per cent to 2.2 per cent. Revised investment, consumer and government spending accounted for much of the change. Growth in real final sales to private domestic purchasers was also raised to 4.6 per cent. These are annualised quarter-on-quarter rates, not comparisons with the same quarter last year.
Economics & Markets··Evening
The second-quarter estimate moves higher
The US Bureau of Economic Analysis now estimates that real gross domestic product grew at a 2.2 per cent annualised rate in April through June. Its previous second estimate for the same quarter was 1.5 per cent. Fox Business also reported the upward change in the third estimate. The difference is 0.7 per cent point; it does not describe a sudden acceleration in September. The period being measured is still the second quarter. New information and the annual update of national accounts changed the official calculation for that period. An annualised rate expresses how fast a quarterly change would run over a full year if repeated; it is not a direct comparison with the second quarter of last year. The new 2.2 per cent value is a third estimate replacing an earlier estimate for the same period. The revision should be kept separate from growth in the coming quarter. Income and spending accounts can also change as new source data arrive.[1], [2]
What changed within the estimate?
The bureau attributes much of the upward revision to new estimates for private investment, consumer spending and government spending. In the third estimate, consumption, investment and exports contributed to growth, while imports also increased. Imports are subtracted in GDP accounting so that goods and services made abroad are not counted as domestic output. Fox Business identifies commercial and health-care structures and data centres among the investment components, and recreation services and goods in the spending revision. These details show that the revised aggregate does not come from one activity alone. Growth rates for individual components cannot simply be read as the total growth rate, because their weights in the economy differ. The new estimate incorporates fuller information on business investment and household consumption. Changes in government spending are also part of the upward revision. Each component belongs to the production calculation of the same second quarter.[1], [2]
Domestic demand and the comparison base
Growth in real final sales to private domestic purchasers was revised to 4.6 per cent. This measure tracks consumer spending and private fixed investment to show a part of domestic demand separately; Fox Business also reported the new rate. The Bureau of Economic Analysis calculated 2.6 per cent annualised growth in real gross domestic income for the second quarter. Its annual accounts update also lifted the first-quarter GDP growth estimate from the previously published 2.1 per cent to 2.5 per cent. Reading the second quarter’s 2.2 per cent therefore requires noting that the estimate for the preceding quarter has changed too. The first official estimate for the third quarter is scheduled as a separate release on 29 October. Real gross domestic income and real GDP come from separate accounting approaches. Both show growth for the second quarter, although their rates need not match.[1], [2]
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