2nd Quarter GDP Final Estimate Tomorrow: Up or Down from Prior?

The BEA’s third (final) estimate of second-quarter GDP is due Thursday. The Econoday consensus is the BEA will up the reading to 3.1% from 3.0%.

Boosted by upward revisions for inventories and construction, the third estimate for second-quarter GDP is expected to firm slightly, to a consensus 3.1 percent annualized rate vs the headline catching 3.0 percent rate of the second estimate. Consumer spending is expected to hold at the second estimate’s 3.3 percent rate. The GDP price index is seen unchanged at 1.0 percent.

Construction Upgrades?

On August 1, I wrote Construction Spending in June Collapses: Negative Second Quarter GDP Revisions Coming Up?

The commerce department reports Construction Spending in June fell 1.3% vs an Econoday consensus of a 0.5% gain. As a small consolation, the Commerce Department revised May spending from +0.0% to +0.3%.

Consumer Spending

On Friday, September 15, I reported Retail Sales Unexpectedly Decline, Huge Negative Revisions in June and July: Reflections on “Bizarre” Sales Reports

The Census Bureau Advance Retail Trade report shows retail sales unexpectedly fell 0.2% in in August.

More importantly, the Census Bureau revised July from plus 0.6% to plus 0.3%. On top of that, the census bureau revised June from +0.3 to -0.1!

Bloomberg Econoday attempted to whitewash this mess, blaming it all on Hurricane Harvey.

Excuse me for asking but did economists not know there was a hurricane?

At the risk of looking foolish, I will take a stab at 2.5%. A big boost, however, could come from a change in the GDP deflator.

Mike “Mish” Shedlock