The much anticipated Q2 GDP number with prior revisions is out and, as expected, Atlanta Fed's 2.4% estimate was once again nearly spot on, with the advance release coming in at 2.3%, below Wall Street's consensus estimate of 2.5%. But more importantly, as part of the annual revision to prior GDP data, one which as we observed would include the infamous "double seasonal adjustments", both Q1 2014 and 2015 GDP prints, the "winter" collapse, was revised well higher, with Q1 2014 increase from -2.1% to -0.9%, while last quarter's final GDP which had printed at -0.2% is now 0.6%.
The breakdown by revised component:
And the culprit: the capex recovery is officially dead - fixed investment as a % of GDP dropped to the lowest since Q2 2012.
From the report:
Real personal consumption expenditures increased 2.9 percent in the second quarter, compared with an increase of 1.8 percent in the first. Durable goods increased 7.3 percent, compared with an increase of 2.0 percent. Nondurable goods increased 3.6 percent, compared with an increase of 0.7 percent. Services increased 2.1 percent, the same increase as in the first quarter.
Real nonresidential fixed investment decreased 0.6 percent in the second quarter, in contrast to an increase of 1.6 percent in the first. Investment in nonresidential structures decreased 1.6 percent, compared with a decrease of 7.4 percent. Investment in equipment decreased 4.1 percent, in contrast to an increase of 2.3 percent. Investment in intellectual property products increased 5.5 percent, compared with an increase of 7.4 percent. Real residential fixed investment increased 6.6 percent, compared with an increase of 10.1 percent.
Real exports of goods and services increased 5.3 percent in the second quarter, in contrast to a decrease of 6.0 percent in the first. Real imports of goods and services increased 3.5 percent, compared with an increase of 7.1 percent.
Real federal government consumption expenditures and gross investment decreased 1.1 percent in the second quarter, in contrast to an increase of 1.1 percent in the first. National defense decreased 1.5 percent, in contrast to an increase of 1.0 percent. Nondefense decreased 0.5 percent, in contrast to an increase of 1.2 percent. Real state and local government consumption expenditures and gross investment increased 2.0 percent, in contrast to a decrease of 0.8 percent.
The change in real private inventories subtracted 0.08 percentage point from the second-quarter change in real GDP after adding 0.87 percentage point to the first-quarter change. Private businesses increased inventories $110.0 billion in the second quarter, following increases of $112.8 billion in the first quarter and $78.2 billion in the fourth.
Real final sales of domestic product -- GDP less change in private inventories -- increased 2.4 percent in the second quarter, in contrast to a decrease of 0.2 percent in the first.
Some further notes from the WSJ, which observes that "the economic expansion--already the worst on record since World War II--is weaker than previously thought, according to newly revised data."
From 2012 through 2014, the economy grew at an all-too-familiar rate of 2% annually, according to three years of revised figures the Commerce Department released Thursday. That's a 0.3 percentage point downgrade from prior estimates. The revisions were released concurrently with the government's first estimate of second-quarter output.
Since the recession ended in June 2009, the economy has advanced at a 2.2% annual pace through the end of last year. That's more than a half-percentage point worse than the next-weakest expansion of the past 70 years, the one from 2001 through 2007. While there have been highs and lows in individual quarters, overall the economy has failed to break out of its roughly 2% pattern for six years.
The latest revision, however, did significantly upgrade what was seen as a historically wretched winter of 2014.
The upward revision to the first quarter of 2014 was largely due to revised data on construction spending, specifically on power structures. The revision reflected both new seasonal adjustments and newly available data.
That 2011 figure, and other data, could be revised in future years. Commerce Department officials are undertaking a comprehensive review of GDP data with the intent of refining the seasonal adjustment process.
And while the historical revisions will surely draw many snickers among those who fail to see any difference between the US and Chinese Departments of Truth, especially since the Q2 GDP number will be will be revised as the Fed sees fit in just one month to fit the rate hike narrative, what is most troubling was the downward revision to prior years, with GDP in the 2011-2014 period now said to be growing at a 2.0% pace, significantly below the 2.3% reported previously.
The worst "economic expansion" in history was even worse than previously expected.