Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. Why Investors Care
| Released on 8/30/07 For Q2 Preliminary 2007 | |||||||||||||||||||||||||
| |||||||||||||||||||||||||
Highlights
For the first revisions to second quarter GDP, real GDP was revised up to an annualized 4.0 percent from the initial estimate of 3.4 percent, matching expectations. The second quarter pace followed a nearly flat 0.6 percent annualized increase in the first quarter. The upward revision to the latest quarter makes it the strongest gain since the 4.8 percent pace for the first quarter of 2006. The second quarter GDP price index was left unchanged from the initial estimate of 2.7 percent - also meeting the market forecast. The core PCE price index was revised to an annualized 1.3 percent for the second quarter, compared to the initial estimate of 1.4 percent.
The upward revision to the initial estimate for the second quarter is due to greater increases in business investment and net exports than initially estimated.
For the second quarter overall, the acceleration in growth primarily was due to a jump in nonresidential structures investment, stronger exports, and a decline in imports. Residential investment was negative but less so than in prior quarters. However, personal consumption growth slowed notably.
Year-on-year, real GDP growth stood at 1.9 percent in the second quarter, compared to up 1.5 percent in the first quarter. Year-on-year, the GDP price index slowed to up 2.7 percent in the second quarter from up 2.9 percent in the prior quarter. The core PCE price index growth rate came in at up 2.0 percent in the second quarter, down from up 2.4 percent in the first quarter.
Today's report is right on market expectations and theoretically should not have notable impact.
Second quarter real GDP strengthened to an annualized 3.4 percent from an anemic 0.6 percent pace in the first quarter. The stronger second quarter growth was primarily due to a jump in nonresidential structures investment, stronger exports, and a decline in imports. As expected, residential investment was quite negative. However, personal consumption growth slowed notably. On the inflation front, the GDP price index slowed to 2.7 percent pace, following a 4.2 percent increase in the first quarter. The core PCE price index also slowed to a 1.4 percent growth rate in the second quarter, after a 2.4 percent boost in the first quarter. Given that many are concerned about how subprime problems and stock market declines may be affecting consumer spending, second quarter revisions may seem unimportant. But the data will provide the starting point for evaluating whether coming moderation in consumer spending is coming off robust numbers and whether other sectors are taking up the slack sufficiently.
Real GDP Consensus Forecast for preliminary Q2 07: +4.0 percent annual rate
Range: +3.6 to +4.3 percent annual rate
GDP price index Consensus Forecast for preliminary Q2 07: +2.7 percent annual rate
Range: +2.6 to +2.8 percent annual rate
![[Chart]](chart.gif)
|
Real GDP growth is always quoted at a quarterly annual rate. It measures how much the economy has grown over a three-month period. Quarterly growth rates are often volatile; consequently, economists also like to look at the year-over-year growth in GDP. The yearly changes tend to be more stable. |
![[Chart]](chart_1.gif)
|
It is common to compare quarterly changes at annual rates in the GDP deflator. These can be volatile, just like the quarterly swings in real GDP growth; as a result, the trend in inflation is better determined by year- over- year changes. |
| 2007 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}