Final 2Q GDP Report Not Much Improvement

Second quarter gross domestic product—initially reported at nearly minus 33 percent in July, then minus 31.7 percent in August—didn’t improve much in the Bureau of Economic Analysis final estimate yesterday.

The BEA third (final) estimate, based on more complete source data than were available for the second estimate issued last month, showed GDP decreased at an annual rate of 31.4 percent in the second quarter. By contrast, in the first quarter (pre-pandemic), real GDP decreased by 5 percent.

BEA said the upward revision with the third estimate primarily reflected an upward revision to personal consumption expenditures, partly offset by downward revisions to exports and to nonresidential fixed investment.

The decrease in real GDP reflected decreases in PCE, exports, nonresidential fixed investment, private inventory investment, residential fixed investment and state and local government spending, partly offset by an increase in federal government spending. Imports, a subtraction in the calculation of GDP.

The report said the decrease in PCE reflected decreases in services (led by health care) and goods (led by clothing and footwear). The decrease in exports primarily reflected a decrease in goods (led by capital goods). The decrease in nonresidential fixed investment primarily reflected a decrease in equipment (led by transportation equipment). The decrease in private inventory investment primarily reflected a decrease in retail (led by motor vehicle dealers). The decrease in residential investment primarily reflected decreases in new single-family housing.