The only noteworthy economic data released this morning is a report from the Bureau of Economic Analysis (BEA) which showed that U.S. gross domestic product (GDP) in the second quarter of 2016 grew by less than previously estimated. Specifically, real GDP, which measures the value of the production of goods and services in America adjusted for price changes (inflation), increased at an annual rate of 1.1 percent in Q2. That is up from the first quarter’s 0.8 percent pace of expansion but down from last month’s 1.2 percent advance Q2 estimate, and the third quarter in a row with sub-2 percent growth. The downward revision was due largely to weaker state and local government construction spending and continued inventory drawdowns, which together more than offset the upward revisions to nonresidential fixed investment and consumer spending. This soft Q2 GDP print goes against the pattern of a big second quarter rebound seen over the past few years, and altogether the average annual growth rate during the current business cycle is one of the lowest of any post-WWII expansion. Moreover, this disappointing report suggests that the U.S. economy, even seven years after the “Great Recession” ended, is still struggling to achieve the breakout in growth seen in past recoveries.
Sources: Econoday, Twitter, Bloomberg, ZH, BEA, FRBSLPost author: Charles Couch