WASHINGTON - Second quarter GDP growth was revised down to a 1.1% annual rate from the 1.2% pace in the advance estimate, as expected, data released Friday by the Bureau of Economic Analysis showed.
The very small downward adjustment to 2Q growth was due to a larger inventory drag, larger declines in residential fixed investment and government spending, and a wider net export gap as imports were revised up and exports were revised down.
Offsetting these downward revisions were a large upward adjustment to nonresidential fixed investment, entirely intellectual property products, and a small upward adjustment to PCE growth. As a result of the mix of revisions, real final sales were unrevised at a 2.4% gain.
The first estimate of second quarter Gross Domestic Income was a modest 0.2% gain, down from a revised 0.8% in the first quarter. This puts the GDP/GDI average at a 0.6% gain for the second quarter, slower than the 0.8% increase seen in the first quarter.
The chain price index rose 2.3% in the second quarter, a slight upward revision from the 2.2% gain in the advance estimate and still well ahead of the 0.5% increase in the first quarter. Analysts had expected the gain in price index to be unrevised.
The closely watched core PCE price index was revised up to a 1.8% annual rate from the 1.7% rate posted in the advance estimate, but the year/year rate for the measure remained at 1.6%.
Overall, the 2Q GDP data still point to strong PCE growth heading into the third quarter, when a disappointing retail sales report for July suggested consumers put on the brakes a bit with the exception of auto spending. However, the weaker inventory number for 2Q, which came after positive inventory contributions in previous four quarters, could add to production in 3Q if sales pick back up.
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