If someone were inventing a curse to fit our immediate economic era, they might put it this way: “May you live in an age of interesting revisions.”
Consumer Spending Fueled a Lot More GDP Growth Than Expected
If someone were inventing a curse to fit our immediate economic era, they might put it this way: “May you live in an age of interesting revisions.”
The Commerce Department on Thursday released its first revision of economic growth for the second quarter. It said gross domestic product (GDP) expanded at a three percent annual rate, up from the so-called “advance estimate” of 2.8 percent.
Economists had not seen this coming. The consensus forecast was for the second estimate to match the first. The range of estimates actually was slightly tilted to the downside, with the Econoday panel’s forecasts ranging from 2.6 percent to 2.9 percent. No one had penciled in three percent growth.
To get a feel for just how much stronger growth has been in the second quarter than economists thought, recall that the economy grew just 1.4 percent in the first quarter, and the projection for the second quarter prior to the first estimate’s release last month was for just 2.1 percent growth. In other words, the economy was growing more than 40 percent faster than economists thought.
The primary driver of the upward revision was consumer spending. Personal consumption expenditures were revised up to a 2.9 percent growth rate from 2.3 percent. Spending on durable goods rose at a 4.9 percent rate, two-tenths higher than the initial estimate, and spending on nondurables rose at a two percent rate, six-tenths higher than the prior estimate. Services spending was much higher, rising at a 2.
