Economic growth was revised downward for the second quarter of 2022, coming more in line with economists’ original expectations, according to the Bureau of Economic Analysis (BEA).
Yearly real Gross Domestic Product (GDP) was revised down from 2.4% to 2.1% growth in the second estimate for the second quarter of 2023, according to the BEA. The revision is more in line with original expectations from economists of around 2% growth for the second quarter, showing signs of a cooling economy. (RELATED: US Job Growth Drops Sharply, Signaling Worrying Trend For American Economy)
“The GDP estimate released today is based on more complete source data than were available for the ‘advance’ estimate issued last month,” according to the press release from the BEA. “In the advance estimate, the increase in real GDP was 2.4 percent. The updated estimates primarily reflected downward revisions to private inventory investment and nonresidential fixed investment that were partly offset by an upward revision to state and local government spending.”
Why is it that economic data are only revised down lately? Jobs, housing, JOLTS, and now Q2 GDP: 2.1% vs 2.4%, w/ personal consumption basically flat, fixed investment revised weaker, inventories now in the red – but GOVERNMENT revised upward: pic.twitter.com/QOFTuiWn0A
— EJ Antoni (@RealEJAntoni) August 30, 2023
Real GDP growth for the first quarter of 2023 was initially estimated to be 1.1% but was later revised up to 2.0%.
The revision was accompanied by the preliminary estimate for corporate profits, which increased 0.5% in the second quarter of 2023, which is in contrast with a decrease of 1.8% in the first quarter of 2023, according to the BEA.
Jerome Powell, chair of the Federal Reserve, gave a speech last week at the Jackson Hole Economic Symposium, forecasting that if inflation remains high, the job market continues to grow more than expected, and economic growth persists above normal levels, the Fed will consider raising its federal funds rate. Interest rates have currently been set to a range of 5.25% and 5.50% by the Fed, the highest rates since 2001, after a series of 11 rate hikes since March 2022.
Private employment data from ADP, which has previously been optimistic in its growth projections, released its estimates for August, noting only an additional 177,000 private jobs were added for the month. For July and June, ADP initially estimated 324,000 and 497,000 new private jobs were created in the month, respectively.
The U.S. added 187,000 jobs in July, lower than the estimated 200,000 jobs by economists. The number of jobs added in May and June were both revised down by a collective 49,000 jobs.
Inflation remained elevated at 3.2% for July, rising from 3.0% in June but down from a high of 9.1% in June 2022.
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