The 411 on Q2 GDP

The advance estimate of real GDP (GDP adjusted for inflation), released on July 28, showed the U.S. economy grew at an annualized rate of 2.6% in the second quarter, slightly missing consensus expectations of 2.7%, but accelerating from a downwardly revised 1.2% in the first quarter. Diving into the numbers, the data showed that consumer spending rebounded after a weak first quarter and business spending on equipment grew at an annualized rate of 8.2%, the highest growth in almost two years. The two disappointments were residential construction, which slowed after a strong first quarter, and inventories, which were expected to bounce after a sharp contraction in the first quarter but were basically flat [Figure 1].

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