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Real gross domestic product (GDP) increased 2.1% in the second quarter of 2019, “advance” estimate by the Bureau of Economic Analysis. Core PCE +1.8% vs +2.0% expected. Cconsumption was stronger but drop in business investment and weak housing hinder.

US Q2 GDP

GDP highlights

Growth:

  • Q2 GDP 2.1% vs +1.8%
  • Q1 GDP 3.1% q/q annualized
  • Q4 2.2% (revised to 1.1%)
  • GDP y/y +2.3% vs +2.7% prior
  • 2018 GDP unrevised at +2.9%

Consumption:

  • Personal consumption 4.3% vs 4.0% exp (fastest since Q2 2017) Prior +0.9% (revised to +1.1%)
  • Consumer spending on durables +12.9% vs +0.3% prior
  • Consumption added 2.85 pp to GDP
  • Government consumption added 0.85 pp to GDP

Investment:

  • Business investment -0.6% vs +4.4% prior (first contraction since 2016)
  • Home investment -1.5% (6th consecutive contraction)
  • Gross private investment cut 1.0 pp from GDP

Trade:

  • Exports -5.2%
  • Imports +0.1%
  • Trade subtracts 0.65 pp from GDP
  • Inventories +$71.7B (cuts 0.88 pp from GDP)

Inflation:

  • GDP price index 2.4% vs 2.0% expected Prior
  • GDP price index 0.9% (revised to 1.1%)
  • Core PCE 1.8% vs 2.0% exp Prior Core PCE 1.2% (revised to 1.1%)
  • GDP deflator +2.5%

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Fed Note: The case for a 50 basis point cut decreased further.

Personal Income

Current-dollar personal income increased $244.2 billion in the second quarter, compared with an increase of $269.8 billion in the first quarter. Decelerations in compensation and in personal current transfer receipts were partly offset by an upturn in personal income receipts on assets and a deceleration in contributions for government social insurance (a subtraction in the calculation of personal income).

Disposable personal income increased $193.4 billion, or 4.9 percent, in the second quarter, compared with an increase of $190.6 billion, or 4.8 percent, in the first quarter. Real disposable personal income increased 2.5 percent, compared with an increase of 4.4 percent.

Personal saving was $1.32 trillion in the second quarter, compared with $1.37 trillion in the first quarter. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 8.1 percent in the second quarter, compared with 8.5 percent in the first quarter.

Source:Bureau of Economic Analysis

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