US GDP Growth Revised Up to 2.5 Percent on Stronger Exports; Inflation Falls

The Bureau of Economic Analysis reported today that the U.S. economy grew at an annual rate of 2.5 percent in the second quarter of 2013. The advance estimate for Q2, released last month, had shown a 1.7 percent growth rate. Higher exports and lower imports were a major factor behind the stronger growth estimate. As the following chart shows, Q2 growth appears to have picked up from its slower pace in Q4 2012 and Q1 2013. The Q2 data are subject to further revision in a third estimate that the BEA will release next month.

The next table breaks the latest growth data down according to the contributions of each major sector of the economy. The contribution of consumption expenditure was essentially unchanged at 1.21 percentage points, a little slower than the average growth of consumption over the previous eight quarters. Investment contributed a little more to growth than previously reported, but the upward revision was entirely attributable to higher nonfarm inventory investment. Inventory investment is an ambiguous indicator. Higher inventory investment can indicate either that firms are optimistically stocking up in anticipation of stronger future sales, or that goods they had planned to sell were unexpectedly piling up in warehouses and store shelves because of disappointing demand. >>>Read More

Follow this link to view or download a classroom-ready slideshow with charts of the latest GDP data