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


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