GDP Second quarter 2013

http://money.cnn.com/2013/08/29/news/economy/gdp-report/index.html

U.S. economic growth stronger than thought

By Steve Hargreaves  @hargreavesCNN August 29, 2013: 9:33 AM ET

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NEW YORK (CNNMoney)

The U.S. economy grew significantly faster than thought in the second quarter, which may help convince the Federal Reserve to start unwinding its stimulus program sooner rather than later.

The nation's gross domestic product -- the broadest measure of economic activity -- rose at a 2.5% annual rate from April through June, according to a revised estimate from the Bureau of Economic Analysis Thursday. That's higher than the 1.7% rate originally reported, and better than the 2.1% rate that economists surveyed by Briefing.com were expecting.

Rising exports, consumer spending and real estate spending helped boost the second quarter numbers. A decline in government spending acted as a drag.
The big upward revision was primarily the result of a better trade balance -- the nation exported more and imported less than previously thought, according to Paul Ashworth, chief US Economist at Capital Economics.
Related: How the Fed can taper without killing housing
All economic news is being closely watched for signs on when the Federal Reserve will begin curtailing its controversial bond-buying program. The stronger economic growth emboldens views that the Fed could start pulling back as soon as next month.
"The upward revision should give Fed officials more confidence that the recovery is gathering steam as the fiscal drag begins to fade," Ashworth wrote in a research note. "Under those circumstances, we still think the Fed will begin tapering its monthly asset purchases in September."
The Fed has been buying $85 billion a month in Treasuries and mortgage-backed securities in an effort to keep interest rates low and spur economic growth. Last May, Fed Chairman Ben Bernanke outlined a plan to begin "tapering" the purchases, and pegged the timing of that plan to improving economic data.

 

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Investors have taken that to mean as early as September, and have sent bond yields -- and mortgage rates -- soaring.
While 2.5% growth is decent, it's still below the 3.3% the economy has averaged since 1929. The August jobs report -- set for release next Friday -- will provide additional, and more current, data on the health of the U.S. economy.
The government revises its GDP figures several times after the initial release. This is the second estimate for second quarter GDP.  



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GDP Released On 8/29/2013 8:30:00 AM For Q2:13 Prior Consensus Consensus Range Actual Real GDP - Q/Q change - SAAR 1.7 % 2.2 % 2.0 % to 2.5 % 2.5 % GDP price index - Q/Q change - SAAR 0.7 % 0.7 % 0.7 % to 0.8 % 0.8 % Highlights Real GDP growth for the second quarter was raised to an annualized rate of 2.5 percent compared to the initial estimate of 1.7 percent and compared to a fourth quarter rise of 0.1 percent. Expectations were for 2.2 percent. Final sales of domestic product showed a revised gain of 1.9 percent versus the advance estimate of 1.3 percent. This series increased 0.2 percent in the first quarter. Final sales to domestic producers (which exclude net exports) was nudged down to 1.9 percent versus the initial estimate of 2.0 percent. This followed a 0.5 percent gain in the first quarter. The upward revision to GDP growth was mainly due to a sharp upward revision to net exports. Also, there were improvements to inventories and nonresidential structures investment. Government purchases were modestly weaker. Other components were little changed. Turning to comparisons to the first quarter, the increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures, exports, private inventory investment, nonresidential fixed investment, and residential fixed investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased. Headline inflation for the GDP price index was revised up to 0.8 percent compared to the advance estimate of 0.7 percent annualized inflation rate. When excluding food and energy, inflation for the second quarter was unrevised at 1.1 percent. Overall, GDP growth for the second quarter was better than earlier believed. Compared to past recoveries, the latest growth rates are not inspiring but the upward revision may add to Fed debate to gradually start to taper asset purchases. Market Consensus before announcement GDP growth for the second quarter topped expectations but partly due to first quarter GDP being revised down with annual revisions. GDP gained an annualized 1.7 percent, following a 1.1 percent rise in the first quarter. The prior estimate for the first quarter was 1.8 percent. Analysts had projected a 1.1 percent advance for second quarter GDP. Demand was soft in the second quarter but even softer than earlier believed in the first quarter. Final sales of domestic product posted at a gain of 1.3 percent versus the second quarter rise of 0.2 percent. Final sales to domestic producers (which exclude net exports) increased 2.0 percent after nudging up 0.5 percent in the first quarter. Overall inflation slowed in the second quarter. Headline inflation for the GDP price index rose an annualized 0.7 percent after a 1.3 percent increase in the first quarter. When excluding food and energy, inflation eased to 1.1 percent in the second quarter from 1.6 percent the prior quarter. Definition Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy.  Why Investors Care   Real GDP growth is always quoted at a quarterly annual rate. It measures how much the economy has grown over a three-month period. Quarterly growth rates are often volatile; consequently, economists also like to look at the year-over-year growth in GDP. The yearly changes tend to be more stable. Data Source: Haver Analytics   It is common to compare quarterly changes at annual rates in the GDP deflator. These can be volatile, just like the quarterly swings in real GDP growth; as a result, the trend in inflation is better determined by year- over- year changes. Data Source: Haver Analytics