GDP expanded at 2% in 2Q, half the pace of 2018’s Q2

Inflation-adjusted GDP increased at an annual rate of 2% in the second quarter, according to the third estimate from the Bureau of Economic Analysis. In the first quarter of the year, GDP grew at a 3.1% pace.

Today’s Q2 GDP estimate is based on more complete data than was available for the advance numbers issued last month, when GDP was estimated at the same rate.

The change primarily reflected downward revisions to personal consumption expenditures and nonresidential investment, which were partly offset by an upward revision to state and local government spending, and a downward revision to imports.  

Inflation-adjusted, or real, gross domestic income grew 1.8% in Q2, slowing from 3.2% in Q1. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weighs GDP and GDI, increased 1.9% in Q2, declining from 3.2% in Q1.

The increase in real GDP in the second quarter reflected positive contributions from federal government spending, and state and local government spending, which were partly offset by negative contributions from private inventory investment, nonresidential fixed investment, and exports. These downturns were partly offset by growth in both PCE and federal government spending.

Current-dollar GDP increased 4.7%, or $241.5 billion, in Q2 to a level of $21.34 trillion. This is up from the first quarter’s 3.9%, or $201.0 billion.

The gross domestic price purchase index increased 2.2% in Q2, up from an increase of 0.8% in Q1. Lastly, personal consumption expenditures increased 2.4%, up from 0.4% last quarter.

Here are updates to the previous estimate:

Real GDP: Remained the same from last estimate’s 2%

Current-dollar GDP:  Increased to 4.7%, up from last estimate’s 4.6%

Real GDI: Decreased to 1.8%, down from last estimate’s 2.1%

Average of Real GDP and Real GDI: Decreased to 1.9%, down from last estimate’s 2.1%

Gross domestic purchases price index:  Remained the same from last estimate’s 2.2%

Personal consumption expenditures: Increased to 2.4%, up from last estimate’s 2.3%

The chart below shows that GDP fell one percentage point from the first quarter and sits nearly two percentage points below Q2 of 2018.

Real GDP q2