The Commerce Department reported that the U.S. economy grew much faster than expected in the second quarter as real Gross Domestic Product rose at a 1.7 percent annual rate, up from a 1.1 percent rate in the first quarter.
Analysts had forecast a growth rate of just 1.0 percent for the second quarter, however, it’s important to remember that this was just the first of three estimates for the period and there has recently been a strong trend of downward revisions.
Numerous revisions to the data resulted in less severe contractions and higher growth in recent years. For example, the 2008-Q4 contraction at an 8.9 percent rate was revised higher to 8.1 percent and the 2011-Q4 growth rate of 4.1 percent improved to 4.9 percent.
The most recent data showed that private domestic investment and personal consumption expenditures accounted for all of the second quarter growth, contributing 1.34 percentage points and 1.22 percentage points, respectively, of the 1.7 percent growth rate. The trade deficit subtracted 0.81 percentage points and government spending was about flat.
Source: Iacono Research
