Second Quarter 2017 GDP Final Revision

The estimate for output growth during the second quarter of 2017 was revised marginally higher by the Bureau of Economic Analysis.  Their third and “final” attempt to quantify gross domestic product (GDP) indicates the economy grew 3.1 percent on an inflation-adjusted, annualized basis versus 3.0 in the second estimate.  For comparison, GDP increased just 1.2 percent from January through March of this year.

Consumers continued leading the charge, but businesses were willing to part with cash as well.  Americans increased outlays for housing and utilities, communications services, and prescription drugs.  Meanwhile, firms invested more in all three possible categories: equipment, structures, and intellectual property products.

Changes in the estimates for inventory levels and consumption of services resulted in most of the upward revision.  More specifically, farm inventories were higher, reflecting newly available data from the Department of Agriculture’s Economic Research Service.  Additionally, updated information from the Census Bureau’s Quarterly Services Report and airline passenger data from the Department of Transportation were better than first estimated.  Of course, there was some negative news; revised retail sales data from the Census Bureau showed Americans spent fewer dollars on goods than earlier figures suggested.  Fortunately, this last segment represents a relatively small portion of consumers’ budgets.

This year’s third quarter just finished, so we are still several weeks away from the BEA’s earliest output estimate for the quarter ending in September.  For now, the Federal Reserve Bank of Atlanta is forecasting the economy decelerated.  Of course, there were significant weather disruptions in the period, making the estimation process even more challenging than normal.  However, many indicators looked healthy during the period, so even if it slowed, economic growth was at least positive.