EmailSecond quarter GDP was revised higher in the second estimate, up to 1.7% from 1.5%. The Briefing.com consensus expected GDP to show 1.6% growth. More importantly, real final sales -- which exclude inventories -- were revised up from a 1.2% gain to show 2.0% growth. That revision depicts a much healthier economy and is more in-line with trends going back to Q2 2011. As expected, the majority of the upward revision to real final sales was the result of better trade data.
When calculating the preliminary GDP estimate, the BEA assumed the trade deficit in June remained near the $48.0 bln that was recorded in May. The deficit actually declined to $42.9 bln in June. That move resulted in net exports contributing 0.3 percentage points to second quarter GDP as opposed to subtracting 0.3 percentage points in the preliminary release. Personal consumption (1.7% vs. 1.5%), nonresidential investment in structures (2.8% vs. 0.9%), and government spending (-0.9% vs. -1.4%) were also revised higher. Inventory changes were revised down from $66.3 bln in the preliminary estimate to $49.9 bln in the second estimate. That revision subtracted 0.2 percentage points from second quarter GDP growth. Inventories had added 0.3 percentage points to growth in the preliminary estimate. Negative revisions were also seen in equipment and software spending (4.7% vs. 7.2%) and residential investment (8.9% vs. 9.7%).
