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Q2 GDP Surges 4%, Beats Estimates Driven By Inventories, Fixed Investment Spike; Historical Data Revised
Moments ago the Commerce department reported Q2 GDP which blew estimates out of the water, printing at 4.0%, above the declining 3.0% consensus, as a result of a surge in Inventories and Fixed Investment, both of which added over 2.5% of the total print, while exports added another 1.23% to the GDP number. The full breakdown by component is shown below.
As the BEA noted, "The Bureau emphasized that the second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The "second" estimate for the second quarter, based on more complete data, will be released on August 28, 2014."
Some other components:
The change in real private inventories added 1.66 percentage points to the second-quarter change in real GDP after subtracting 1.16 percentage points from the first-quarter change. Private businesses increased inventories $93.4 billion in the second quarter, following increases of $35.2 billion in the first quarter and $81.8 billion in the fourth quarter of 2013.
Real personal consumption expenditures increased 2.5 percent in the second quarter, compared with an increase of 1.2 percent in the first. Durable goods increased 14.0 percent, compared with an increase of 3.2 percent. Nondurable goods increased 2.5 percent; it was unchanged in the first quarter. Services increased 0.7 percent in the second quarter, compared with an increase of 1.3 percent in the first.
Real nonresidential fixed investment increased 5.5 percent in the second quarter, compared with an increase of 1.6 percent in the first. Investment in nonresidential structures increased 5.3 percent, compared with an increase of 2.9 percent. Investment in equipment increased 7.0 percent, in contrast to a decrease of 1.0 percent. Investment in intellectual property products increased 3.5 percent, compared with an increase of 4.6 percent. Real residential fixed investment increased 7.5 percent, in contrast to a decrease of 5.3 percent.
Real exports of goods and services increased 9.5 percent in the second quarter, in contrast to a decrease of 9.2 percent in the first. Real imports of goods and services increased 11.7 percent, compared with an increase of 2.2 percent.
What is interesting is that the Commerce Department announced that as a result of incomplete June data, the biggest components of the GDP beat, Inventories and Trade, were estimated. In other words, assume that future revisions of Q2 GDP will be lower, not higher, as the actual data comes in, and especially as the CapEx data, which contrary to the GDP report, has not rebounded.
Real federal government consumption expenditures and gross investment decreased 0.8 percent in the second quarter, compared with a decrease of 0.1 percent in the first. National defense increased 1.1 percent, in contrast to a decrease of 4.0 percent. Nondefense decreased 3.7 percent, in contrast to an increase of 6.6 percent. Real state and local government consumption expenditures and gross investment increased 3.1 percent, in contrast to a decrease of 1.3 percent.
Speaking of revisions, today the BEA also released its annual revision of all data from 1999 to Q1 2014, which made last quarter's "harsh weather" -2.9% print a more palatable -2.1%, in the process throwing everyone's trendline calculations off as yet another GDP redefinition was implemented.
The chart of the original and revised data is shown below.
Here are some additional details via Bloomberg:
- 2Q personal consumption up 2.5% vs est. up 1.9% (range 1.5%-2.9%); prior revised to 1.2% from 1%
- Core PCE q/q 2% vs est. 1.9% (range 1.4%-2.3%)
- Gross private investment up 17% in 2Q after falling 6.9% in 1Q
- Residential up 7.5% after falling 5.3%
- Purchases of durable goods jumped 14%, most since 3Q 2009
- Corporate spending up 5.9% vs little changed q/q
- Inventory accumulation added 1.7ppts to GDP
And the quarterly breakdown between the original and just revised data:
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So we can go ahead and raise rates now, right?
Must have built another euroclear tunnel to fund the deficits, so now that the economy is doing so well, coast is clear to taper the QE.
Question; On the "Personal Consumption Expenditures", is this where the Gov puts back in the food and gas that it took out when it calculated the inflation rate?
Full on soviet style. There is no other way to say it.
Hell, they can mark it 5% if they want. As long as they keep tapering. When QE is 0, then the real fun will start.
This is such a relief. With all the negativity out there, I was beginning to think the US economy was a bit wobbly.
Had a feeling they'd go full-retard with this one.
This really scares me, because by going "all in" with the bluff we are almost assured of a false flag to cover up the destruction and assign blame on somebody other than the Fed and our political elite.
May God help us and guide humanity toward truth and freedom.
There are so many false flag opportunities (Ukraine, border collapse, Ebola outbreak, electronic attack on the stock market, low yield nuke detonation in NYC and/or DC) the Deep State doesnt know what to do with itself. The DUMBs are on high alert I'm afraid..
the numbers are the numbers; but do people feel it and believe
+4% GDP .... based on -10% USD Devaluation YoY ?
Instead of QoQ GDP comparisons, more relevant would be to incorporate Inflation ( Fiat Devaluation ) into the Equation.
I wonder what the GDP CURVE would look like since 1971.
.... & I wonder what the REAL (SHADOW STATS) GDP CURVE would look like since 1971.
we now have GDP in dog years......loll...that's a good one!!
Its the weather stupid. The sun came out in the second quarter to reveal a bright, bright, fuzzy math furball.... Just one problem, this is "too big to swallow".
Yep, just like I thought. There was no way they were going to allow a low number this time around after Q1. I knew the number would be totally unbelievable and outrageous. Way to not disappoint you crooks.
More great news, no boubt Yellen will raise rates this afternoon to cool things off in BubbleVille. Janette knows how important this is for the savers and retired fixed income demographic.
i would bet my house Yellen will be as dovish as ever.
ZH perma-bears are again shocked. Trillions of dollars in money printing had to go somewhere. Duh! Millions saw their stock portfolios soar and went out and bought "free" cars and boats and I-Toys. Millions of others borrowed zero rate Fed dollars and went out and bought nearly free cars and boats and I-Toys. Janet is laughing at the naysayers and high-fiving it at the office. The Pres is calling her today to congratulate.
The Fed has succeeded beyond their wildest dreams. Their models showed that if they printed and handed out enough trillions of $, the lemmings would respond, and they did. Inflation? The Fed Bank is thrilled, only thing left is to fully re-inflate the housing bubble. GDP will then print at +6%. Dow will be at 20k. Yes, 100% of goals met.
What happens when they stop creating money out of thin air? They never will! Any market downturns will be met with jawboning, then they open the spigot wider still. Beyond Goldilocks…perpetual prosperity. Welcome to the “New Normal”.
Excellent.
Beyond the scope of understanding for most of the Hedgers of Zero, who long for the days of "going off the grid" and "living in their bunkers" with their "beans, bullets and bullion."
But your post is grounded in reality. The Fed (all of them) has won, not the battle, but the war.
It is over Hedgers. No collapse, no ruination, no bankers hanging from light posts, no masses begging you for your gold.
But as Trader has noted - "perpetual prosperity and a new normal."
We understand perfectly.
The "new normal" consists of the same financial idiocy which has destroyed governments and ruined nations throughout history.
"This time will be different"... Sure it will! ROFL!
Remember your words today. Perhaps they will bring you warmth and comfort in the future.
Interesting take.
But I kind of disagree. Yellen is for sure not high-fiving anybody. They are desperately trying to fix and manipulate anything they still can, even trying to push the whole world into a war just to cover up their tracks. Some of them are probably waking up regularly in cold sweat at night, wondering how the next weeks will unfold, while they can already see over the edge of the cliff.
But hey, this is just my opinion. Maybe I'm wrong.
Who do you think will play Yellen in the upcoming HBO puff propaganda film "Never Too Big To Bail"?
Woody Allen in chubby suit dressed in drag is my pick.
William Hurt did a bang up job portraying Henry Paulson as a benevolent bureaucrat desperately trying to save the country from total ruin. /sarc
There is no perpetual motion machine.
If they keep printing long enough the dollar loses its reserve currency status, and suddenly the printing won't matter. You can't print oil.
AAAAAAAAAAAAAAAH...............Riiiiiiiiiiiiiiiiiiight!!!!!!!!
Left vs Right horse poo. Now we have a very good appraisal of your intellect. Thanks for the heads up.
Never underestimate the predictablity of leftist lies and stupidity and destructive capability.
Leftists, rightists, middlists ... they all lie ... because they all work for the Money Trust.
I wonder if in the history of gdp numbers if there has ever been this wide of a swing from qtr to qtr. There may have been but I'm sure it's quite rare especially considering the first qtr number was a negative printed gdp.
lower highs (q3 2013) and lower lows (q1 2014) now what does that signify class?
Below is an email I received from the President of my company this morning while taking my morning shit. I almost fell of the god damn toilet.
"Second quarter gross domestic product is up a whopping 4%. This is up from and adjusted first quarter negative 2.1 %. Housing up 7.5 % in the second quarter. This is good news for the economy and helps take the negative out of people minds about things aren't as good. Hopefully builders will start building more homes and people will start buying more homes. In the same light businesses will start making more capital investments and buildings inventories. And hopefully municipalities will start funding new projects which create more public finance advisory business, more underwriting, more trading and improved capital markets.
This is goods news. Let's drink the koolaide and get out there and get more than our share of the opportunity."
Lavorgnanomics. Something tells me that fuckmook was told something on monday..
"Hopefully builders","Hopefully municipalities",Hopefully people..... Hope and dump, while the dumping is good.
Hilarious! ROFL. Thanks for sharing!
Quite dangerous to read emails while taking a dump these days...
You should sue your boss.
personal consumption is up but imports are down? run that by me again
More mid-term propaganda.
It's a good thing we can count on all those "intangibles" to pump up our economy!
had to go to 4% to keep the revision from going negative. Thank God all those costa ricans are finally showing up, I'm tired of working 80 hour weeks and having 5 people call and offer me a new job every day. When you have a president with absolutely no parental influece of a father growing up, you get all these hidden resentments and issues as an adult, Resentment towards Israel because Netanyahu is simply smarter than our mud puppy, towards military leaders because of their solid background and respect for authority, towards border patrol and their authority because he needs to dilute voters that don't see eye to eye with him and recognize him as the messiah. This man is unfit for duty.
It is the Chicago School of Economics slowly boiling the frog.
This absolute lie is kind of shocking.
It's all political.
Nothing is real.
Stop the presses! No, I mean stop the presses.
So what was the first Q1 print? 0.1% or higher then got slashed by more than 2% So Q2 will finish somewhere around 1-2%
were building up to the election highlight.
2/3 the way though the 2nd quarter, 8/28/2014 they're going revise 2nd quarter est. with more complete data, that will setting up the 3rd quarter gdp annocement going into election.
i'm betting, going into elections 3rd quarter gdp will be 6.5-7%.
Must be the weather...
<-- Real Estate will tank first
<-- Bonds/Stocks will tank first
How is it going to go this time?
Which of these bluffs is going to lead the crash of bubble 2.0 in 2014?
(Edit: I'm going with Real Estate)
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4% growth, eh? Sure doesn't feel like it.
You'd think the trinkets and bobbles would be flying off the shelves?
1.69% change in pesonal expenditure?
On what?
We'll see the corroborating evidence with retail and such in a couple of months, that will undoubtedly, indubitably, be an astounding number also. Or revised upward in a few months after the first number is revealed.
Or perhaps, it's just the end price, with inflation being the count for the growth? Why don't we subtract inflation from GDP? (Or do we?)
{I dunno. I'm just a schlub, that would like to understand this stuff, but just feels they're getting lied to more and more.}
Let's see some stats like the Chinese Data, like the HK Import/export data that seems to be, not corroborating… to prove this massive 4%.
Or will we see this number downgraded in a few months, too?
Who to believe… Hmm…
•J•
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