Update: According to Stone McCarthy the pain will be even worse: "we suspect GDP will be revised downward to around 0.5% from the 1.3% advance estimate."
Prepare for two consecutive quarters of sub 1% GDP. The culprit: the surge in the June trade deficit which came earlier at $53.1 billion, far, far higher than expectations of $48 billion, and much worse than the May $50.8 billion which also was a major downside miss. So following the revised 0.4% GDP in Q1, we are about to get a second revision to Q2 GDP that will bring it below 0.9%. And Obama bitches at the S&P for not believing (as neither does his former budget chief Orszag) that America will grow at a rate of 5% for the next decade. Sigh.
The US trade balance unexpectedly deteriorated in June, falling to -$53.1bn from -$50.8bn previously. The weakness reflected a sizable decline exports. Real goods exports fell by 3.3% (mom), following a decline of 1.4% in May. Export growth was far weaker than assumed in the Commerce Department's advance estimate of Q2 GDP growth. Data released since the advance estimate was published (trade flows, inventories, and construction spending) imply a downward revision to Q2 GDP to around 0.9% (qoq ar) from 1.3% originally reported. Real goods imports declined slightly during the month, dropping by 0.2% (mom) after a 1.9% gain in May. The deterioration in the trade balance was concentrated in non-petroleum goods (the trade balance for oil was about unchanged).
And an even uglier number from SMRA:
According to the source data from the advance estimate of second quarter GDP, BEA had calculated a roughly $49.7 billion June trade deficit. The wider figures from the actual June data will likely provide a smaller than estimated contribution to Q2 GDP. In fact, we suspect GDP will be revised downward to around 0.5% from the 1.3% advance estimate.
At least going from 0.4% to 0.5% is, well, growth.