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Economic Growth: Even Better than Expected

Real gross domestic product (GDP) increased at an annual rate of 4.2 percent in the second…

  • October 1, 2018

Real gross domestic product (GDP) increased at an annual rate of 4.2 percent in the second quarter of 2018, according to a “second” estimate released by the government’s Bureau of Economic Analysis. The previous estimate was lower, at 4.1 percent, so this is good.

In the first quarter, real GDP increased 2.2 percent.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month.

In the advance estimate, the increase in real GDP was 4.1 percent.

With this second estimate for the second quarter, the general picture of economic growth remains the same; the revision primarily reflected upward revisions to nonresidential fixed investment and private inventory investment that were partly offset by a downward revision to personal consumption expenditures (PCE).

Imports which are a subtraction in the calculation of GDP, were revised down.

Real gross domestic income (GDI) increased 1.8 percent in the second quarter, compared with an increase of 3.9 percent in the first quarter.

The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 3.0 percent in the second quarter, compared with an increase of 3.1 percent in the first quarter.

This increase in real GDP in the second quarter reflected positive contributions from PCE, nonresidential fixed investment, exports, federal government spending, and state and local government spending that were partly offset by negative contributions from private inventory investment and residential fixed investment. Imports decreased.

The acceleration in real GDP growth in the second quarter reflected accelerations in PCE, exports, federal government spending, and state and local government spending, as well as a smaller decrease in residential fixed investment.

These movements were partly offset by a downturn in private inventory investment and a deceleration in nonresidential fixed investment. Imports decreased after increasing in the first quarter.

Current‑dollar GDP increased 7.6 percent, or $370.9 billion, in the second quarter to a level of $20.41 trillion. In the first quarter, current-dollar GDP increased 4.3 percent, or $209.2 billion.

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