Second Quarter 2018 Revised Gross Domestic Product

After poring over more complete data, the Bureau of Economic Analysis made a slight adjustment to their initial estimate of gross domestic product (GDP) in the second quarter of 2018.  Initially reported as +4.1 percent on an annualized inflation-adjusted basis, they now believe output grew 4.2 percent.  This revised tally will get one more adjustment in a final revision due out later this month and then minor tweaks in subsequent quarters and years as necessary. 

Several major categories were revised in this iteration.  Consumer spending was slightly less strong than first estimated; however, coming down to 3.8 percent from 4.0 percent is still quite robust.  Net exports were better than first stated as imports actually fell in the period (initially reported as a slight build), while exports increased more than in the initial estimate.  Government outlays were also revised higher as national defense spending as well as state and local expenditures were greater.  Finally, private investment was revised substantially higher; this category’s initial estimate showed a decline of 0.4 percent, but it now appears to have grown 0.5 percent; spending on equipment and intellectual property were both revised higher. 

Make no mistake, America’s expansion continues advancing.  This most recent increase of 4.2 percent is the best level since a 4.9 percent uptick in the third quarter of 2014.  Early indications of the current quarter suggest no end in sight for the virtuous portion of the business cycle America currently enjoys.  However, there does seem to be a growing body of evidence suggesting the growth rate is probably decelerating in the third-quarter of 2018, but this will remain unknown until late October.