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First Cut: Second estimate of 2Q GDP a trifle lower at 2.0%, personal consumption revised up

The second estimate of second quarter GDP showed growth of 2.0% (previously 2.1%), only a trifle lower than before and on expectations.

Personal consumption expenditures remained the power behind growth. PCE was up 4.7% (previously up 4.3%) with upward revisions in durables (up 13.0%, previously up 12.9%), nondurables (up 6.8%, previously up 6.0%), and services (up 2.8%, previously up 2.5%).

However, downward revisions for fixed investment (down 1.1%, previously down 0.8%), net exports (down to -$663.9 billion, previously -$661.7 billion), and the change in inventories ($74.6 billion, previously $75.9 billion) more than offset gains in consumption and shaved a tenth off overall growth.

The downward revision is minimal and does not change the picture of modest expansion for the second quarter. As data becomes available for the third quarter, it looks like consumer spending is likely to hold up, and the housing market could provide support as well, but business investment, net exports, and the change in inventories could remain weaker.


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