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2nd-Quarter GDP Growth Expected to Be Revised Down

2nd-Quarter GDP Growth Expected to Be Revised Down
(Tang90246/Dreamstime)

Thursday, 08 August 2019 01:19 PM

Economists expect the government will lower its second-quarter GDP growth estimate to around a 1.8% rate later this month after a separate report from the Commerce Department on Thursday showed wholesale inventories were unchanged in June instead of rising 0.2% as reported last month.

The economy grew at a 2.1% annualized rate in the second quarter, slowing from the first quarter's brisk 3.1% pace. Growth is seen below a 2.0% rate in the July-September quarter.

The component of wholesale inventories that goes into the calculation of gross domestic product edged up 0.1% in June.

That suggested the pace of inventory accumulation was much slower than the government had assumed when it compiled its advance GDP report last month. The government is scheduled to publish its second GDP estimate for the April-June period on Aug. 29.

According to JPMorgan's Silver, the June wholesale data implied inventories increased at a $66 billion rate in the second quarter, instead of the $71.7 billion pace estimated in the advance GDP report.

That means inventories chopped 1.0 percentage point from GDP, rather than the estimated 0.86 percentage point.

Some of the slowdown in inventory accumulation reflects a surge in consumer spending in the second quarter. Businesses are also carefully managing stock levels because of the darkening economic outlook.

Meanwhile, the U.S. economy likely will grow at a 2.2% annualized rate in the third quarter, based on the latest economic data, the Atlanta Federal Reserve’s GDPNow forecast model showed.

This was unchanged from the pace estimated by the Atlanta Fed’s GDP program last week.

The U.S. economy likely will grow at a 1.9% annualized rate in the third quarter, based on the latest data on domestic payrolls, trade and factory orders, the Atlanta Federal Reserve’s GDPNow forecast model showed on Friday.

This was weaker than the 2.2% pace estimated by the Atlanta Fed’s GDP program on Thursday.

Slight declines in the nowcasts of the contributions of consumer spending and nonresidential equipment investment to third-quarter real GDP growth following last Friday's light vehicle sales release from the U.S. Bureau of Economic Analysis were offset by an increase in the contribution of inventory investment to third-quarter real GDP growth after that same release and this morning’s wholesale trade report from the U.S. Census Bureau.

© 2019 Thomson/Reuters. All rights reserved.

   
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Economists expect the government will lower its second-quarter GDP growth estimate to around a 1.8% rate later this month after a separate report from the Commerce Department on Thursday showed wholesale inventories were unchanged in June instead of rising 0.2% as reported last month.
gdp, growth, revise, down, slow, economy
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2019-19-08
Thursday, 08 August 2019 01:19 PM
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