WASHINGTON — The U.S. second quarter real GDP revision was better than expected, showing decent real growth into Q3.
U.S. Q2 real GDP growth was revised to 3.7% growth, a huge 1.4 points more than the original estimate and better than generally expected. The usual revision is about 1/3 of the current movement.
There were boosts to many areas from better source data. The report included upward revisions to structures, inventories, and consumption from new Commerce Department reports, as well as more investment via R&D in corporate financial reports. Lower imports and better inventories rounded out the revisions.
Intellectual property investment is now posting an 8.6% increase, about a percentage point above trend, and its biggest gain since prior to the recession in Q3:2006.
The Commerce Department's new emphasis on reconciling income to growth showed gross domestic income at a 0.6% rise, well below the pace of GDP as lower saving supported buying. This left the average of GDP and GDI at a 2.1% gain, which is probably closer to the underlying pace of the economy. Wages were revised up $5.6 billion in Q1 in on-going strength.
The GDP price index was up 2.1% and the core PCE price index was up 1.8%, both close to the pace that policy officials mention as about right.
Corporate profits from current production were up $47.5 billion or 2.4%. About 35% of this stemmed from nonfinancial corporations. Profits from the rest of the world dipped.
Overall, the Q2 GDP revisions suggest momentum into Q3 because the consumer remains a mainstay of the U.S. economy, with personal consumption up 3.1%. In particular, consumers are spending on autos (added 0.26 point to the GDP total) and on nondurables outside of food, gas and clothing (added 0.34 point).
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