In its second of three estimates, the BEA revised second-quarter GDP up to 3.0% from 1.2%. The consensus was 2.8%.
The BEA’s measure of inflation was 1.0%. Lower inflation numbers raise real GDP.
Real gross domestic product (GDP) increased at an annual rate of 3.0 percent in the second quarter of 2017, according to the “second” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.2 percent.
The acceleration in real GDP in the second quarter primarily reflected upturns in private inventory investment and federal government spending and an acceleration in PCE that were partly offset by downturns in residential fixed investment and state and local government spending and a deceleration in exports.
The price index for gross domestic purchases increased 0.8 percent in the second quarter, compared with an increase of 2.6 percent in the first quarter. The PCE price index increased 0.3 percent, compared with an increase of 2.2 percent. Excluding food and energy prices, the PCE price index increased 0.9 percent, compared with an increase of 1.8 percent.
GDP Price Indexes
CPI
Had the BEA used the BLS’s CPI-U (consumer price index for all urban consumers) as the GDP deflator, the revision would have been even higher.
This, of course, assumes inflation is zero.
Mike “Mish” Shedlock
Lots of nice round numbers in this report especially the magic 3.0% GDP growth figure.
I wonder what that number would have come in at if they had used the REAL inflation rate (more like 4%-5% or higher) as the deflator instead of their ridiculous 1.0%?
“The PCE price index increased 0.3 percent, compared with an increase of 2.2 percent. Excluding food and energy prices, the PCE price index increased 0.9 percent, compared with an increase of 1.8 percent.”
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PCE +3.3% over Q1. The “goods” portion +5.9%. Imo, the lower price index here reflects “promotional” pricing that Dick’s CEO complained about a week or two ago. Yesterday Best Buy got hammered for same. Everyone talking about the Amazon effect and need to cut prices to compete.
In the short run it will boost revenues, but a what cost to margins? Sustainable?
Not sustainable. Margins are already razor thin and today I saw Sketchers on Groupon. We are an online retailer and our costs have exploded in the past 3 years primarily in shipping and insurance costs. Real inflation for small business is pushing 10%. The idiots at the Fed use wage inflation because they know it doesn’t exist. Every time I hear good economic numbers, I look at the retail stocks and they scream Depression.
Yep. And you know what they say about “good” news … it flows downhill.
Every vendor to these outfits is hearing the same message.
I don’t how you do it, but you need to cut costs.
You are focusing on what supports your flawed view of the world. Retail stocks may be down for old style department stores. But millions of people are buying expensive SUVs/trucks and homes.
There are always winners and losers. Tune your skills and your business to the modern world. Or just continue to whine that you don’t really fit in and your life is going sour.
want see massive inflation,wait till your car insurance bill adds the 15-20% markup for harvey,talk bout sticker shock
My magic eight-ball says “Ask again later…” and it has been far more accurate than anyone in Washington or Wall Street
“Increased government spending”….There will always be lots of that to prop up “GDP”.
If only I had a dollar for every global empire in history that figured it could run up unlimited debts…
If you live by Government Supplied Stats, you will die by Government Supplied Stats.
Governments Lie because they can.