Second Estimate 2Q2017 GDP Growth Improves To 3.0 %

The second estimate of second quarter 2017 Real Gross Domestic Product (GDP) was increased to a positive 3.0 % from the advance estimate’s 2.6 %. Year-over-year growth was also increased from the advance estimate.

Analyst Opinion of GDP

The consumer spending improved, but the real improvement came from using a lower inflation deflator. I am not a fan of quarter-over-quarter exaggerated method of measuring GDP – but my year-over-year preferred method showed moderate acceleration from last quarter.

The market expected:

Seasonally Adjusted Quarter-over-Quarter Change at annual rate Consensus Range Consensus Advance Actual 2nd Estimate Actual Real GDP 2.5 % to 3.0 % +2.8 % +2.6 % +3.0 % GDP price index 1.0 % to 1.0 % +1.0 % +1.0 % +1.0 % Real Consumer Spending 2.8 % to 3.5 % +3.0 % +2.8 % +3.3 %

Headline GDP is calculated by annualizing one quarter’s data against the previous quarters data. A better method would be to look at growth compared to the same quarter one year ago. For 2Q2017, the year-over-year growth is now 2.2 % – up marginally from 1Q2017’s 2.0 % year-over-year growth. So one might say that the rate of GDP growth improved from the previous quarter.

The same report also provides Gross Domestic Income which in theory should equal Gross Domestic Product. Some have argued the discrepancy is due to misclassification of capital gains as ordinary income – but whatever the reason, there are differences.

Real GDP (blue line) Vs. Real GDI (red line) Expressed As Year-over-Year Change

This second estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. (See caveats below.)

Real GDP per Capita