We saw the third estimate of U.S. second quarter GDP Thursday which was higher at 3.1% up from the second estimate of +3.0% and the first estimate of +2.6%. However corporate profits after tax were revised to +0.1% from +0.8% is worrisome particuarly with stock markets at all time highs.
We saw the third estimate of U.S. second quarter GDP Thursday which was higher at 3.1% up from the second estimate of +3.0% and the first estimate of +2.6%. However corporate profits after tax were revised to +0.1% from +0.8% is worrisome particuarly with stock markets at all time highs. Notably inventories added 0.12% to growth (which accounted for the whole uograde and some). The concern with inventories is if inventories don’t move then it is temporary and can be a drag. Corporate profits falling underscore that risk.
Note the August US wholesale inventories were released att he same time and showed a 1.0% rise vs a 0.4% estimate. Breaking it down retail inventories for August were +0.7%. Up from -0.1% in July. Durable goods inventories rose 1% and are now up 5% on the year. Retail sales and durble goods are to be watched over the coming months to let us know if their is movement here.
Key components of Q2 GDP
- Personal consumption +3.3% vs +3.3% second estimate
- GDP price index 1.0% vs +1.0% second estimate
- Core PCE q/q +0.9% vs +0.9% second estimate
- Corporate profits after tax +0.1% vs +0.8%.second estimate
- Inventories + $5.5B vs $1.8B second estimate.
- Imports +1.5% vs +1.6% second estimate
- Exports +3.5% vs +3.7% second estimate
- Home investment -7.3% vs -6.5% second estimate
There’s a slight uptick in the headline, which is a bit of good news for growth. The bad news is that .
Inventories added 0.12 pp to growth. Inventories rose $5.5B compared to a $1.8B second estimate.
From The Traders Community News Desk