The release came in at +1.1% QoQ SAAR versus +1.22% SAAR in the first reading; that downward revision was bang-on economists’ estimates. In the first quarter, current dollar GDP increased 1.3 percent, or $58.9 billion. In the first quarter, real GDP rose 0.8%.
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Also unchanged was the single largest detractor to growth in the second quarter – gross private domestic investment, which sunk 9.7 percent for its biggest drop since the second quarter of 2009, when the USA was still fighting its way out of the Great Recession.
The U.S. central bank hiked interest rates at the end of past year for the first time in almost a decade, but has held them steady since amid concerns over persistently low inflation. Many economists believe the labor market is a better gauge of the economy’s health than gross domestic product, which can be hard to measure.
The dollar slightly trimmed losses against a basket of currencies after the data, while USA stock futures were little changed. U.S. Treasuries were little changed.
Imports, which are a subtractions in the calculation of GDP, increased. Lower profits could pin down the anticipated rebound in business spending.
Real gross domestic income (GDI) increased 0.2 percent in the second quarter, compared with an increase of 0.8 percent in the first. The annual increase was 0.9%.
Many economists had tipped the United Kingdom economy to maintain momentum ahead of Britain’s vote to leave the European Union, but they also said the United Kingdom would start to see an economic slowdown in the months following Brexit.
The productivity slowdown of the past decade, if it continues, “would have wide-ranging consequences for employment, wage growth and economic policy more broadly”, Federal Reserve Vice Chairman Stanley Fischer said last weekend. Adjusted pretax earnings dropped 1.2% to mark the fifth decline in the past six quarters, the Commerce Department reported.
Consumers account for 70% of USA economic activity and they are likely to continue to spend at a rate that keeps the economy churning forward. And an alternative measure, pretax profits with inventory valuation and capital consumption adjustments, declined 1.2% in the second quarter from the prior three months.
He added: “Looking ahead, consumers might be able to maintain strong growth in their spending for another quarter, but when inflation picks up in earnest early next year and firms follow through on plans to freeze hiring, they will have to slow down”. Economists say some of the inventory drawdown could be attributed to robust consumption.
Consumers are still the biggest drivers of the U.S. economy. London time, up 0.2 per cent on the day.Growth in the second quarter was heavily centred on April. That was marginally lower from the 1.2% expansion rate reported for last month.
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The revision to government spending was due to lower state and local government investment in structures, while the revision to inventory investment reflected downward revisions to construction, mining and utilities, which were partially offset by an upward revision to wholesale trade.
