Q2 GDP Nudged Higher in Revision

Second revisions rarely matter, but this was above the 3.7% expected by both Bloomberg and Dow Jones. It is also partly adding support for higher growth in the United States for all of 2015. As a reminder, the 3.9% was before the news turned into panic selling based on China’s weaker and weaker reports.

The GDP’s price component was left unchanged at 2.1% for the second quarter. Recall that the Federal Reserve’s frequent pointing for inflation is a 2.0% to 2.5% inflation target. Does this mean we are finally getting close enough to justify that elusive rate hike?

Second-quarter strength was after a very slow start in the first quarter. Growth in the first half is signaling an average of just 2.2% for 2015.

Janet Yellen said just on Thursday evening that the expected rate hike likely was still coming at the end of 2015. She almost certainly would have known about the direction of the GDP report, but we also have to consider that this is still a second-quarter report that does nothing at all to curb current economic reports.

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