US Q2 GDP Components

Bear in mind that this is the first estimate of Q2 GDP: growth looks to have stalled in the second quarter. 

What growth there was, has been largely dependent on the property component of gross domestic investment.   Net exports detracted from growth, although both exports and imports recorded stronger growth – it would be interesting to see how this pans out in future revisions though.  


Personal consumption expenditures increased by a nominal 0.45% in Q2: as you can see both the level and the trend are historically significant.image

Both exports and imports increased strongly, but imports more than exports, which detracted from GDP.  That said, the movement in both must be set against the weakness of the prior two quarters.   We have not actually seen any meaningful growth in goods exports.  The following chart with data from from CPB World Trade Monitor clearly shows a rebound from March export levels – note the Japanese rebound and relative weakness in emerging economies..


Inventories also helped:


But inventories are at the average level for periods showing an increase in inventories (green line) but well above the average for all quarterly changes.   Inventories are more likely to detract from growth in the next quarter.

Growth has been led by gross private domestic investment, in particular non residential structures and residential investment.  But what of the important non residential investment ex structures component?


Growth has been above its weight in the index since the start of the expansion, but this is typical.  The nominal trend remains downward for the moment.  

Growth does appear to be slowing down with some exceptions: new manufacturing orders have been boosted by transportation orders, largely aircraft orders.  Outside of this, manufacturing orders have not increased above October 2012 levels:



And industrial production growth has slowed:



Retail sales are also slowing – it is worth noting that the current annual figures have been boosted by declines from the year ago period and quarterly data by weak March data:


And bank credit growth is also slowing down:



And the momentum behind employment growth looks to have stalled with the exception of retail:


As to the supporting data:

New manufacturing orders outside of transportation (primarily aircraft orders, which were very strong) were weak, while manufacturing production is still below February levels and running at only 0.87% annual growth since December.

Retail sales have also recently weakened, although year on year comparisons look strong due to year ago weakness. You could argue that after adjusting for employment growth and inflation (CPI All Items), retail sales have gone nowhere. Bank lending growth has also weakened, while employment growth looks as if it may be losing momentum.

Recent US ISM PMIs look to signal a recovery in growth in Q3, although here, one could argue that much of the burst in activity could be due to a rebound from first half weakness.

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