US 2Q REAL GDP REV TO UP 1.8%, DN 0.5 PT, ON IMPORTS
--Real Final Sales +3.0%, vs +3.2% in Prior Estimate --Sources of Revision Include Higher Imports, Lower Invty
Than Estimated --Corp. Profits Lessen, +1.7% After Tax, as Domestic Costs Rise --GDP Price Index +1.5%; Computer Prices Still Falling
By Joseph Plocek
WASHINGTON (MktNews) - U.S. 2Q real GDP was revised to +1.8%, exactly as expected by the median estimate in a Market News International poll of economists, but its slowest pace since a similar reading in 2Q 1998.
The 2Q price index was +1.5%, versus +1.6% in 1Q, still held down by lower computer prices, another expected result. A detail table in the GDP release showed that prices for gross domestic prices less computers were up 2.5%, an increasing trend from +1.7% in 1Q and +0.4% in 1Q.1998.
But the U.S. economy is still strong, with imports subtracting 1.81 points from growth, and real final sales, an estimate of the economy excluding the change in inventories, at +3.0% in 2Q. The prior real final sales estimate was +3.2%.
Inventories subtracted 1.19 points from 2Q growth. The Inventory Valuation Adjustment was negative for the first time since 1996, at -$17.1 billion, largely reflecting a sharp rise in energy prices.
The sources of the GDP revision included additional data showing higher imports and lower business inventories than originally assumed. The Commerce Department said that June imports came in $38 billion more than expected and the change in business inventories was $12 billion less than anticipated, both at seasonally adjusted annual rates.
The general picture remains one of rising consumption (healthy at +4.6%, versus a stellar +6.7% in 1Q) and business investment (nonresidential fixed investment jumped 11.2%), offset by higher imports and a drop in inventory investment. The 2Q growth slowdown was mainly accounted for by slower consumption and a drop in both federal and state and local government spending.
Corporate profits lessened in 2Q, with profits after tax at +1.7%, versus +6.2% in 1Q. Domestic costs are rising faster than prices, pushing domestic industries' profits to -$10.9 billion from +$38.1 billion in 1Q. Profit decreases before tax were widespread among major industries, with the largest drops in transportation and public utilities, and in nondurable goods manufacturing.
>>>That's a pretty heavy weighting for PC prices in the
>>>price data, about a one-third factor in the rate of
>>>change. |
