Q2 2013 real GDP came in at 1.7% Q1 GDP was revised down to 1.1%. Government spending declines were much less of a drag on the economy than Q1 while imports sucked out -1.51 percentage points of economic growth. Exports did recover but were about half of what imports subtracted from GDP. Investment grew on across the board increases. Consumer spending decreased slightly from Q1. Generally speaking 1.7% GDP implies fairly weak economic growth, the third quarter in a row for GDP below 2.0%.
As a reminder, GDP is made up of: where Y=GDP, C=Consumption, I=Investment, G=Government Spending, (X-M)=Net Exports, X=Exports, M=Imports*.
The below table shows the percentage point spread breakdown from Q1 to Q2 GDP major components. GDP percentage point component contributions are calculated individually.
|Comparison of Q1 2013 and Q2 2013 GDP Components|
Consumer spending, C in our GDP equation, shows less growth than Q1. In terms of percentage changes, real consumer spending increased 1.8% in Q2 in comparison to a 2.3% increase in Q1. Increases were evenly spread with services adding a 0.43 percentage point contribution and goods showing a 0.79 percentage point contribution to PCE. Durable goods consumer spending contributed 0.48 percentage points to personal consumption expenditures. Below is a percentage change graph in real consumer spending going back to 2000.
Graphed below is PCE with the quarterly annualized percentage change breakdown of durable goods (red or bright red), nondurable goods (blue) versus services (maroon).
Imports and Exports, M & X subtracted –0.81 percentage points to Q2 GDP as imports soared from Q1 . Import services, which includes offshore outsourcing, were -0.22 percentage points and imported goods subtracted -1.29 percentage points from GDP. The U.S. also exported 0.22 percentage points worth of services, so the two canceled each other out in Q2. The below graph shows real imports vs. exports in billions. The break down of the GDP percentage change to point contributions gives a clear picture on how much the trade deficit harms U.S. economic growth.
Government spending, G was –0.08 percentage points of Q2's GDP, a -0.4% percentage decline from Q1. It looks like the national defense spending rout is over, with just another –0.5% drop for Q2, after two quarters of implosion. State and local governments actually increased spending and added 0.04 percentage points from Q2 GDP. Below is the percentage quarterly change of government spending, adjusted for prices, annualized.
Investment, I is made up of fixed investment and changes to private inventories. The change in private inventories alone gave a +0.41 percentage point contribution to Q2. Changes in private inventories were less than Q1 as farm inventories returned to a more normal contribution level, 0.13 percentage points. Below are the change in real private inventories and the next graph is the change in that value from the previous quarter.
Fixed investment is residential and nonresidential and is a bright spot in the Q2 GDP report, as it was in Q1. Overall, fixed investment contributed +0.93 percentage points to GDP.
Part of fixed investment is Residential fixed investment. Residential contributed +0.38 percentage points to Q2 GDP. One can see the housing bubble collapse in the below graph and also how there is no meteoric recovery in terms of economic growth, but a modest one, for the last two quarters, in spite of all of the housing talk . Nonresidential fixed investment added 0.55 percentage points but this is in part due to the addition of intellectual property into GDP calculations.
The price index for gross domestic purchases, was 0.3% for Q2 in comparison to 1.2% for Q1. This means there was less inflation in comparison to last quarter. Since the price index is used to remove inflation from GDP to obtain real growth, less inflation means less price increases to eat away at economic growth. The core price index, or prices excluding food and energy products, was 0.8%,an decrease of -0.6 percentage points from Q1 .
Nominal GDP: In current dollars, not adjusted for prices, of the U.S. output,was $16,633.4 billion, an 2.4% increase from Q1. In Q1, current dollar GDP increased 2.8%. All figures are annualized.
Real final sales of domestic product is GDP - inventories change. This gives a better feel for real demand in the economy. This is because while private inventories represent economic activity, the stuff is sitting on the shelf, it's not demanded or sold. Real final sales increased 1.3% for Q2, which reflects weak demand. Q1 real final sales were basically flat, only a 0.2% increase.
Below are the percentage changes of Q2 2013 GDP components, from Q1. There is a difference between percentage change and percentage point change. Point change adds up to the total GDP percentage change and is reported above. The below is the individual quarterly percentage change, against themselves, of each component which makes up overall GDP. Additionally these changes are seasonally adjusted and reported by the BEA in annualized format.
Q2 2013 Component Percentage Change
|Component||Q2 Percentage Change From Q1 2013|
The BEA's comparisons in percentage change breakdown of 4th quarter GDP components are below. Changes to private inventories is a component of I.
C: Real personal consumption expenditures increased 1.8 percent in the secondquarter, compared with an increase of 2.3 percent in the first. Durable goods increased 6.5 percent, compared with an increase of 5.8 percent. Nondurable goods increased 2.0 percent, compared with an increase of 2.7 percent. Services increased 0.9 percent, compared with an increase of 1.5 percent.
I: Real nonresidential fixed investment increased 4.6 percent in the second quarter, in contrast to a decrease of 4.6 percent in the first. Nonresidential structures increased 6.8 percent, in contrast to a decrease of 25.7 percent. Equipment increased 4.1 percent, compared with an increase of 1.6 percent. Intellectual property products increased 3.8 percent, compared with an increase of 3.7 percent. Real residential fixed investment increased 13.4 percent, compared with an increase of 12.5 percent.
X & M: Real exports of goods and services increased 5.4 percent in the second quarter, in contrast to a decrease of 1.3 percent in the first. Real imports of goods and services increased 9.5 percent, compared with an increase of 0.6 percent.
G: Real federal government consumption expenditures and gross investment decreased 1.5 percent in the second quarter, compared with a decrease of 8.4 percent in the first. National defense decreased 0.5 percent, compared with a decrease of 11.2 percent. Nondefense decreased 3.2 percent, compared with a decrease of 3.6 percent. Real state and local government consumption expenditures and gross investment increased 0.3 percent, in contrast to a decrease of 1.3 percent.
Other overviews on gross domestic product can be found here.