Second-Quarter GDP Runs Stronger Than Expected in Preliminary BEA Report

Economy

Published: July 31, 2013 8:55 am

The U.S. Bureau of Economic Analysis (BEA) has released its preliminary report on second-quarter gross domestic product (GDP). This report will be subject to two future revisions, but note that today’s report is considered a potential wild card because of the change in methodology for the reports going forward and going back all the way to 1929.

GDP was put as being up by 1.7% on the headline GDP. Dow Jones had an estimate of 0.9% and Bloomberg had the consensus estimate at 1.1%. The first-quarter growth in GDP was up by 1.1%. Another GDP report will be the second look on August 29.

Wednesday’s BEA report said:

The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, non-residential fixed investment, private inventory investment, and residential investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

Growth in the second quarter reflected upturns in nonresidential fixed investment and in exports. There also was a smaller decrease in federal government spending, followed by higher spending at the state and local government levels. Additional points are as follows:

The price index for gross domestic purchases increased 0.3% in the second quarter, compared with an increase of 1.2% in the first.
Excluding food and energy prices, the price index for gross domestic purchases rose by 0.8% in the second quarter, compared with 1.4% in the first.
Real personal consumption expenditures rose by 1.8% in the second quarter, versus an increase of 2.3% in the first quarter.
Durable goods increased 6.5%, compared with an increase of 5.8% in the first quarter.
Nondurable goods rose by 2.0%, compared with an increase of 2.7%.
Services increased 0.9%, compared with an increase of 1.5%.
Real federal government consumption expenditures and gross investment decreased 1.5% in the second quarter, compared with a decrease of 8.4% in the first.
National defense spending fell by 0.5%, compared with a decrease of 11.2%. Nondefense spending decreased 3.2%, compared with a decrease of 3.6%.
Real state and local government consumption expenditures and gross investment increased 0.3%, versus a decrease of 1.3%.
Real private inventories added 0.41 percentage point to the second-quarter change in real GDP after adding 0.93 percentage point to the first-quarter change.
Real final sales of domestic product rose by 1.3% in the second quarter, compared with an increase of 0.2% in the first.

Now that GDP is stronger than expected, and with strong ADP payrolls, we have S&P 500 futures down by two points and DJIA futures down 31 points. Again, all of the revisions and the change in methodology were setting today’s GDP report to be a wild card or even overlooked.

The Average American Is Losing Their Savings Every Day (Sponsor)

If you’re like many Americans and keep your money ‘safe’ in a checking or savings account, think again. The average yield on a savings account is a paltry .4% today, and inflation is much higher. Checking accounts are even worse.

Every day you don’t move to a high-yield savings account that beats inflation, you lose more and more value.

But there is good news. To win qualified customers, some accounts are paying 9-10x this national average. That’s an incredible way to keep your money safe, and get paid at the same time. Our top pick for high yield savings accounts includes other one time cash bonuses, and is FDIC insured.

Click here to see how much more you could be earning on your savings today. It takes just a few minutes and your money could be working for you.