August 28, 2014
2nd estimate for 2Q GDP revised upwards
Aug. 29, 2014 – In its second estimate of the second quarter gross domestic product for 2014, the Bureau of Economic Analysis revised the figure upwards from 4 percent to 4.2 percent – contrary to analysts' expectations.
NAFCU Chief Economist and Director of Research Curt Long analyzed the data for a Macro Data Flash, and found that the strong showing in the second quarter, as revised, suggests that the first quarter's decline of 2.1 percent may have been caused by unseasonably cold weather.
"The rebound in GDP can be attributed to strong contributions in inventory accumulation, personal consumption and business investment," Long wrote. "Overall and core PCE inflation both moved closer to the Fed's target inflation rate in the second quarter. The economy is expected to improve throughout the year as the labor market improves and pent up demand is released."
The BEA attribute growth of real GDP to gains in personal consumption expenditures, private inventories, nonresidential investment, government spending and residential investment. Negative contributions included net exports.
Also, core PCE inflation, excluding food and energy – which is the Fed's key inflation metric – increased from 1.2 percent in the first quarter to 2 percent in the second quarter. The year-over-year figure is 1.5 percent, which means it is approaching the Fed's 2 percent target.
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