The U.S. second-quarter gross domestic product revisions proved surprising as they lowered the trajectory for growth, and portend a weaker third-quarter growth rate as spending slows in the key services area.
Second-quarter real GDP was revised down to 2.8% growth from the prior estimate of 3.3% growth. Personal consumption expenditure core prices are now a still-modest plus-2.2%. Real growth was up 0.9% in the first quarter and most probably is running somewhere between the pace of the first quarter and the second quarter currently.
New services information cut electricity consumption, cut business investment in software, and cut exports of services. The new data stem from a quarterly services survey and from new Energy Department estimates on households.
Nonresidential structures were revised up based on more spending on factories. Other revisions were minor.
This lower GDP number sets up for a weaker third quarter, where spending seems to be dipping, especially on autos and housing.
Corporate profits also were lowered in this estimate, and now are down $900 million before taxes. Both domestic and overseas profits fell. Profits were lower across a range of industries, but advanced at core consumption points, such as utilities and food companies.
— Market News International