By Thomas Cooley and Peter Rupert
Today’s GDP release saw a 0.1 percentage point increase in real gdp to 4.2% for Q2. The change was driven by upward revisions to fixed investment (from 5.4% to 6.2%), inventory investment and government spending (from 2.1% to 2.3%). Downward revisions were seen in PCE (from 4.0% to 3.8%), residential fixed investment (-1.1% to -1.6%), and exports. Imports were also revised down.
The Bigger Picture
Today’s revisions did little to change the course of future policy. Year over year GDP growth has seen a marked trend up since 2016Q2. Whether this robust path will continue is subject to some doubt. A big contributor to the upward tick was net exports. While it is too early to tell it seems likely that a lot of this will be reversed in the third and fourth quarters given the current volatility of trade policy.