Good job, Howard.
The BEA, which one can only assume is every bit as beholden to the Trump administration as the BLS now is, revised Q2’s US GDP tally higher in data released Thursday.
I probably shouldn’t be so sarcastic. Lutnick’s not leaning on the BEA just yet, or if he is, he’s probably not micromanaging the GDP refinement process. That sort of thing comes later, once all the bigger fish are fried.
Anyway, the US economy expanded at a 3.3% clip in Q2, as it turns out. That’s better than the 3% headline print from the advance estimate published late last month.
As the figure reminds you, the see-saw in net trade was the driving force behind Q1’s phantom contraction and Q2’s rebound.
The bump to the personal spending print on Thursday was worth a mention. Recall that personal consumption was revised lower in both revisions for Q1. What began in January as a 1.8% pace was a mere 0.5% gain by the time the final tally was released. For Q2, we’re moving in the other direction, which is to say it looks like we’re going to see these spending figures nudged higher.
On Thursday, the BEA said personal spending ran at a 1.6% pace last quarter, marginally better than the initially reported 1.4%.
The government cited stronger spending on goods, and pharmaceuticals in particular. Trump’s going to slap tariffs on those soon. In services, higher spending on health care and restaurants was a boon.
Even with the upward bump, the spending impulse is well below what it was in 2023 and 2024, when these prints averaged 3%. The contribution from spending to the Q2 headline GDP print was revised up to 1.07ppt from 0.98ppt.
Non-residential fixed investment showed a 5.7% advance, solid indeed. Residential investment — i.e., housing — remained a drag. The key real final sales to private domestic purchasers metric was revised to show a 1.9% advance from 1.2% as initially reported.
Thursday’s release also included the GDI print. Recall that the NBER uses the average of GDP and GDI when making (hopelessly belated) determinations about cycle length, recession dating and so on.
At 4.8%, the GDI read was the among the best in years. The average of the two was 4%. As the figure shows, that’s more than fine.
As far as inflation, the deflator printed 2%, unchanged. At 2.5%, core PCE was likewise unchanged.
All in all, this was a better-than-expected revision. But the upside to key aggregates versus the advance readouts from last month wasn’t pronounced enough to move any needles.
