Commerce upgrades Q2 U.S. economic growth projection

U.S. gross domestic product increased 1.4 percent in the second quarter of 2016, according to the “third” estimate from the Department of Commerce, following a revised increase of just 0.8 percent in the first quarter.    United States gross domestic product (GDP) – the broadest measure of a nation’s overall economic health – increased 1.4 percent during second quarter 2016, according to the “third” estimate from the Department of Commerce, up from a revised 0.8 percent advance in the first quarter.
   GDP is a calculation of the value of the goods and services produced by a nation’s economy minus the value of the goods and services used up in production.
   Commerce’s first and second “advance” estimates pegged Q2 GDP growth at 1.2 percent and 1.1 percent, respectively.
   The department’s Bureau of Economic Analysis (BEA) said that despite the 0.3-percentage point upward revision to second quarter GDP growth, the general economic picture in the U.S. remains the same.
   BEA attributed the upward revision to real GDP growth primarily to an increase in nonresidential fixed investment. Previous estimates saw nonresidential fixed investments decreasing for the three-month period.
   The bureau said the 1.4 percent increase in real GDP in the second quarter reflected increases in personal consumption expenditures, exports and nonresidential fixed investment. However, the GDP increase for the quarter was partly offset by decreases in private inventory investment, residential fixed investment, and state and local government spending, as well as an increase in imports, which are a subtraction in the calculation of GDP.
   Real exports of goods and services grew 1.8 percent in the second quarter, according to BEA, compared with a 1.2 percent increase in its second advance estimate last month. Meanwhile, imports grew 0.2 percent, compared with a previously predicted 0.3 percent increase.
   U.S. export growth has been held in check largely by a strong dollar, which makes U.S. exports more expensive and, therefore, less desirable abroad, as well as declining demand in China and Europe.
   For the full year in 2015, U.S. GDP increased 2.4 percent – the same rate as in 2014.
   By contrast, additional new data from Commerce regarding the U.S. manufacturing sector shows the economy is still struggling to make meaningful headway in the second quarter.
   Following a revised increase of 3.6 percent in July, new orders for durable goods in August remained virtually unchanged, slipping just $100 million (less than 0.1 percent) to $226.9 billion.
   Now down three of the last four months, durable goods orders fell a revised 4.2 percent in June and 2.8 percent in May after increases of 3.3 percent and 1.9 percent in April and March, respectively.
   January durable goods orders showed 4.3 percent growth, but came on the heels of a 4.6 percent decrease in December 2015 and a 0.5 percent drop in November. Orders in February fell another 3.1 percent. Census noted that excluding transportation equipment, up 0.6 percent to $78.1 billion in August, total new orders fell 0.4 percent for the month.
   Shipments of manufactured durable goods in August slid 0.4 percent to $231.7 billion following two consecutive monthly increases.