Main takeaways:
  • GDP keeps running above potential.
  • But GDI has been running very weak in the last two quarters. It may only be a 'catch-down' since GDI was running above GDP, but it bears watching.
  • Inventories are close to the highs -- this could trigger a short-term GDP slowdown.
  • Investments (ex. oil) are picking up.
  • The value of goods and services purchased by US residents, "private" GDP, private domestic demand, are all growing at or slightly above 3%.

Second quarter GDP was revised up by 0.2pp, above market consensus of no change.
Note that the contribution from inventories went down by 0.2pp.




Chart pack
GDP is running roughly 1pp above potential...

The average of GDP and GDI is running a bit below GDP. GDI has slowed in the last two quarters -- the statistical discrepancy is shrinking, since GDI is higher than GDP, but it is worth watching how GDI evolves in the coming quarters.


GDP excluding inventories is growing at 2.5%...


The value of goods and services purchased by US residents (regardless of where goods and services were produced) excluding inventories is growing at a healthy 3% since mid-2014...

... a similar growth pace is obtained if one looks only at "private GDP" (i.e., GDP excluding government consumption and investment)...

...and private domestic demand is growing at 3.5%.

Looking only at business value added, the growth pictures is similar to the whole GDP. It was very strong in 2Q (5.1%) and growing at around 3% since mid-2014.


GDP breakdown: Consumption
Consumption rebounded in 2Q and is growing a bit above 3%.

Excluding energy and food, consumption growth is even higher.



GDP breakdown: Investment
Overall investment growth rebounded in the last few quarters but the annual pace of growth is slowing...

...but recall that there is a collapse in investment in the oil sector.

Excluding oil sector, overall investment picture is improving, with annual growth rates at 6.9%. Note that this is not far away from the pace of investment growth before the great recession.

Nonresidential investment in structures excluding the oil sector is "booming"...


...and investment in intellectual property (R&D) is also booming...

...but traditional equipment investment is lagging well behind.

Housing investment has recovered from the taper tantrum and is growing at a pace comparable to before the great recession.