Final 2Q GDP Estimate Ticks Up to 6.7%

The U.S. economy rumbled along at an even faster pace than previously thought, the Bureau of Economic Analysis reported Thursday.

BEA reported real gross domestic product increased at an annual rate of 6.7 percent in the second quarter, according to its third (final), up from 6.6 percent in its second estimate last month and 6.4 percent in its first estimate in July. In the first quarter, real GDP increased 6.3 percent.

BEA said the increase in second quarter GDP reflected the continued economic recovery, reopening of establishments and continued government response related to the COVID-19 pandemic. In the second quarter, government assistance payments in the form of loans to businesses and grants to state and local governments increased, while social benefits to households, such as the direct economic impact payments, declined. The increase in real GDP in the second quarter reflected increases in PCE, nonresidential fixed investment, exports, and state and local government spending that were partly offset by decreases in private inventory investment, residential fixed investment and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The report said the increase in PCE reflected increases in services (led by food services and accommodations) and goods (led by “other” nondurable goods, notably pharmaceutical products, as well as clothing and footwear). The increase in nonresidential fixed investment reflected increases in equipment (led by transportation equipment) and intellectual property products (led by software as well as research and development). The increase in exports reflected increases in goods (led by nonautomotive capital goods) and in services (led by travel). The decrease in private inventory investment was led by a decrease in retail trade inventories. The decrease in federal government spending primarily reflected a decrease in nondefense spending on intermediate goods and services. In the second quarter, nondefense services decreased as the processing and administration of Paycheck Protection Program loan applications by banks on behalf of the federal government declined.

Current-dollar GDP increased 13.4 percent at an annual rate, or $702.8 billion, in the second quarter to $22.74 trillion. In the first quarter, GDP increased 10.9 percent, or $560.6 billion.

The price index for gross domestic purchases increased 5.8 percent in the second quarter, unrevised from the second estimate. The PCE price index increased 6.5 percent, unrevised from the second estimate. Excluding food and energy prices, the PCE price index increased 6.1 percent, unrevised from the second estimate.

BEA also reported profits of domestic financial corporations increased by $52.8 billion in the second quarter, compared to an increase of $1.3 billion in the first quarter. Profits of domestic nonfinancial corporations increased by $221.3 billion, compared to an increase of $133.2 billion. Rest-of-the-world profits decreased by $6.2 billion, compared to a decrease of $10.6 billion. In the second quarter, receipts increased by $27.4 billion, and payments increased by $33.6 billion.