Great second-quarter GDP report

The Bureau of Economic Analysis announced today that U.S. real GDP grew at a 4.1% annual rate in the second quarter. That’s significantly better than the 2.2% average growth we’ve seen since the Great Recession ended in 2009, and is also a little above the 3.1% average for the U.S. economy over the last 70 years.

Real GDP growth at an annual rate, 1947:Q2-2018:Q2, with the 1947-2018 historical average (3.1%) in blue and post-Great-Recession average (2.2%) in red.

Our latest reading for the Econbrowser Recession Indicator Index is 2.7%, staying at very low levels. The U.S. remains clearly in the expansion phase of the business cycle.

GDP-based recession indicator index. The plotted value for each date is based solely on information as it would have been publicly available and reported as of one quarter after the indicated date, with 2018:Q1 the last date shown on the graph. Shaded regions represent the NBER’s dates for recessions, which dates were not used in any way in constructing the index, and which were sometimes not reported until two years after the date.

Even though the GDP estimates are intended to be seasonally adjusted, there’s been a pattern in recent data that the first-quarter numbers are often a little soft. That gives a boost to second-quarter growth rates like the one just reported. Year-over-year growth rates show a smoother pattern of steady improvement.

Top panel: quarter-to-quarter real GDP growth, quoted at an annual rate, 2009:Q4 to 2018:Q2. Bottom panel: year-over-year real GDP growth. Vertical lines denote first-quarter observations.

Growth in consumption, nonresidential fixed investment, and net exports helped produce the strong numbers. Higher oil prices stimulated a big boost in spending on mining exploration, shafts, and wells. That was one factor in higher investment spending; growing business confidence may have also played a role. Tax cuts likely contributed to the growth in both consumption and investment. Some of the export growth may have come in anticipation of coming tariffs. I count the contribution from exports as a soon-to-disappear plus, though it’s balanced by a big minus in inventory investment that’s also likely transient.

Overall, this is a very good report on the U.S. economy. We’ll see how long it can last.

75 thoughts on “Great second-quarter GDP report

  1. pgl

    Gross private domestic investment declined despite this rise in business fixed investment. Residential investment fell a bit and its seems we had a big drop in inventories.

    Digging into the detail on the modest growth in government purchases, we witnessed weak growth in Federal nondefense purchases and state/local purchases with a huge rise in defense purposes.

    Yes – exports rose a lot but I doubt the soybean boom is sustainable.

  2. pgl

    Trump lies about everything. He correctly noted that real business fixed investment has been growing by 9% over the past two quarters but then we have not seen this for decades? Really? We had this rate of growth back over the 2011/2012 two year period. From 1995 to 2000, real business fixed investment grew by about 10% per year. We had double digit growth rates both during the 1976 to 1978 period and the 1964 to 1966 period. I guess it does not count if the President during these periods was a Democrat.

  3. 2slugbaits

    JDH My understanding is that this GDP report reflects new seasonality weights, so I don’t know if that really explains the 2nd Qtr spike in this report…unless BEA made the seasonality adjustment even worse than it was before. The BEA also notes that the drop in inventories includes the drop in soybean inventories, which then accounts for some of the increase in exports. So it’s kind of a wash.
    Given where we are in the current business cycle, I’m not sure how you could characterize this report as “great.” It would have been fantastic 8 years ago, but not now. The lion’s share of the growth came from increased consumer spending. According to the BEA 1st Qtr personal income grew at a 4.4% rate with personal saving at a 7.2% rate. But 2nd Qtr personal income only grew at 2.6% while personal saving fell to 6.8%. In other words, between 1st and 2nd quarters the growth rate of personal income fell, the saving rate fell, but people increased consumption. I find that worrisome.

    One important note regarding investment: The improvements to private nonresidential fixed investment were twofold. BEA introduced newly available and revised prices for high-tech products, notably software, medical equipment, and communications equipment. In addition, improved measures of current-dollar investment in information and communications technology (ICT) investment were introduced as part of the benchmarking process. As a result, real private nonresidential fixed investment increased 3.7 percent at an average annual rate from 2002-2017, an upward revision of 0.8 percentage point. Of that upward revision, the improved prices accounted for over half. The improved current-dollar ICT investment accounts for much of the remainder.

  4. pgl

    FRED makes this so easy:

    Real Private Nonresidential Fixed Investment did grow rapidly during the late 1990’s as well as during the Obama recovery.

    It is a good thing we have had a couple of good quarters but Trump had to know he was lying how this never happened in the last several decades – right? Oh wait – Kudlow probably told him otherwise. Whether Kudlow knows the truth is a good question.

  5. Bruce Hall

    We might have to wait 5 or 6 years before we can be sure:
    For example, companies appear to have invested $110 billion more in 2012 than previously thought, largely because the statisticians more or less missed some huge corporate spending on cloud computing technology. The revisions employed improved measures of I.T. investments, and voilà.

  6. Barkley Rosser

    Thanks for the warning that this report is subject to new seasonality weights, the implications of which we do not know yet. Also, good point that drop in inventories probably washes out increase in exports. Accounting for that, indeed it looks like most of the gain is due to consumption, not what was expected, although there had been reports in recent months of retail sales rising.

    1. pgl

      Now if this is a consumption led boom, then we are seeing our already low national savings rate fall even further. Let’s say investment demand stays strong. By definition – the current account deficit grows even larger which was the point of Menzie’s previous post.

      1. 2slugbaits

        Yes. You and I know that. And Barkley Rosser knows that. And spencer knows that. And a few others here know that. But the typical Trump voter doesn’t know that. They believe the trade deficit is due to unfair trading practices by the rest of the world. They believe that fairy tale because it fits the household economy model that informs Angela Merkel’s famous “Swabian housewife” view of macroeconomics. It’s the same clueless macro that gave us the Tea Party.

  7. 2slugbaits

    RE: Soybean exports and the EU.

    A couple of commenters are hanging their hats on the supposed EU commitment to buy more US soybeans. Well, they need to hold onto their horses. In general the EU has some tight restrictions on importing genetically modified soybeans. And guess what? It turns out that 94% of US soybeans in 2018 are genetically modified.

    So if American soybean farmers want to do business with the EU, then they will have to switch to non-genetically modified soybeans.

    1. CoRev

      And there goes 2slugs again making false assumptions. “So if American soybean farmers want to do business with the EU, then they will have to switch to non-genetically modified soybeans.” The EU has annually imported from ~13M to ~15M tons of US soybeans and GMO restrictions have been lifted on many grains for ~ a decade.

      1. 2slugbaits

        CoRev I didn’t say the EU countries did not import any soybeans. I said that there were restrictions on those imports. Authorizations for a waiver must originate from a specific country, so Juncker can say whatever he wants but it doesn’t commit any country to import a GMO soybean. This is from the European Parliamentary Research Service describing those restrictions:

        All GMOs, whether intended to be cultivated, imported, used in food or feed or for other purposes, need an authorisation before they can be put on the market in the EU. Applications for authorisation are first submitted to a Member State, which sends them to the European Food Safety Authority (EFSA). In cooperation with Member States’ scientific bodies,4 the EFSA assesses possible risks of GMOs to human and animal health and the environment.

        The authorized GMO soybeans can be found using this database. Just go to the “Category” box and select soybean. It will specify the exact gene along with the expiration date of the authorization.

        There are some EU countries that allow EU authorized GMO soybeans; however, most of the large EU economies have chosen to opt out and have a national ban. Countries that do not allow GMO soybeans include Germany, France, Italy, Poland and Austria. Countries that do allow some GMO soybeans include Britain, Ireland, Spain, Sweden, Greece and the Benelux, Baltic and Balkan countries. In other words, the major economies do not allow GMO soybeans.

        1. pgl

          Try this picture of our 2016 exports by nation in metric tons:

          If CoRev thinks 15 million tons is a lot, he can’t read even the simple picture here. Exports to China are yuuuuge but exports to Germany are so small one needs to get the microscope out to see them.

          If the Trump toadies think selling soybeans to the EU will make up for the loss of demand from China, there are dumber than we gave them credit for.

          1. CoRev

            Komrad pgl, China is estimated to import ~92M tons of soybeans in 2018. They imported ~52M tons from /Brazil in 2017. Your chart shows China imported ~36 M tons of US soybeans in 2016. Where do you think China will make up the 2018 shortfall of soybeans from Brazilian exports?

            If the Trump haters think the loss of demand from China for soybeans will be completely made up by Brazil, they are dumber than we gave them credit for.

          2. 2slugbaits

            CoRev You’re gaslighting. Replying to my comment by saying that EU countries not wanting GMO soybeans will have to look elsewhere is not at all responsive to what I said. It might be true, but it’s irrelevant to my point. I said that if US farmers wanted to do business with the EU, then they will have to switch to non-GMO soybeans. Now you and I may not understand why those EU countries don’t want GMO soybeans, but that’s irrelevant to the facts on the ground. The bottom line is that the only EU countries that allow GMO crops are pretty much bit players. The biggies (Germany, France and Italy) do ban GMO soybeans. That’s just a fact of life. That simply means there is very little opportunity for any significant increase in soybean exports to the EU, regardless of what Trump and Juncker might say. Now what part of that do you not understand?

          3. 2slugbaits

            CoRev If the Trump haters think the loss of demand from China for soybeans will be completely made up by Brazil, they are dumber than we gave them credit for.

            Gaslighting again. No one ever said that Brazilian soybeans would completely make up for US soybeans. That’s a dishonest and strawman argument. The Chinese are imposing a tariff on US soybeans, which means the price of soybeans will increase for Chinese consumers of soybeans. Demand curves are downward sloping. That means China will simply import less and consume less soybeans. But that’s China’s problem, not ours. The bottom line for American farmers is that they will have to find new markets for their soybeans. The EU might import a few more soybeans, but it won’t be more than a marginal increase. Are you trying to tell us that sales to the EU will completely offset lost sales to China?

          4. CoRev

            2slugs, do you have a point? I responded to your exaggerated conclusion, and now you say I’m sowing doubt? Your whole comment was meant to sow doubt. BTW, I chose not to call you one this: “In other words, the major economies do not allow GMO soybeans.” No, not the major economies, but some of them…. But, it is another example of your exaggeration to make a point.

            Doe that sow doubt? I hope so, because exaggeration is the twin of lying.

            And when you say: “Are you trying to tell us that sales to the EU will completely offset lost sales to China?” you are indeed gas lighting. For what purpose? Pgl did imply completely while hiding that one word: “If the Trump toadies think selling soybeans to the EU will make up for the loss of demand from China, there are dumber than we gave them credit for.” Other than the poor English, the common understanding of “make up for the loss of demand includes “completely”. Just a short list of synonyms for “make up for” includes “verb counterbalance, compensate, balance, cancel out, counteract, equal, negate, neutralize, outweigh…” Go ahead and pick the synonym of your choice.

            Exaggerations, gas lighting and pulling at straws are losing arguments.

          5. pgl

            “If the Trump haters think the loss of demand from China for soybeans will be completely made up by Brazil”.

            No one ever made this claim. Will China continue to buy from the U.S.? Yes a bit at slightly higher prices for its consumers but substantially lower prices for the U.S. farmers (aka that tariff wedge).

            But if CoRev even remotely got the basics of supply and demand, it would dawn on him that Brazilian farmers and farmers in other nations will increase their supply from current levels given that the world price would go up.

            And with U.S. prices going down, Europe will indeed buy a wee bit more from us.

            We invited CoRev to model this out and perhaps publish a paper in the American Economic Review. But we should rethink as his incessant whiny comments prove one thing – he is incapable of doing any kind of analysis. Let also write it up coherently.

            So just expect his continued whiny gibberish as this is all he can do.

        2. CoRev

          2slugs, I will repeat the portion of the comment to which I objected, “So if American soybean farmers want to do business with the EU, then they will have to switch to non-genetically modified soybeans.” No! Those few remaining countries restricting GMO soybeans will have to find a source, and not the US farmers.

          In 2017 77% of all soybeans grown worldwide were GMO.

          pgl, yes he did show a reference, but my response was to his interpretation. I’ve repeated twice now. BTW, I’ve also shown references, but your very seldom do. Too often when you do provide one they are incomplete or too general.

          1. pgl

            The popular interpretation you Trump cheerleaders are pushing is that the meager EU imports will make up for the massive drop in Chinese imports of our soybeans. This is like me giving up a nickel in exchange for a $100 bill. Either you are willing to take this sucker bet – or you guys are being dishonest as usual.

          2. 2slugbaits

            CoRev German soybean imports were non-GMO imports because German law doesn’t allow GMO soybeans. That $0.5B in German soybean imports that pgl referenced was satisfied by the production of non-GMO soybeans in the US. The Germans consumed about 20% of the total non-GMO soybeans produced in this country, even though only 6% of US soybeans are non-GMO. Bottom line is that if US farmers want to increase soybean sales to the big EU economies, then US farmers will probably have to increase production of non-GMO beans, which cost more to produce.

          3. CoRev

            2slug, doubling down on your exaggerated assumption, I see. Germany is the largest EU economy and a small importer of US soybeans. You caveat your comment: “Bottom line is that if US farmers want to increase soybean sales to the big EU economies, then US farmers will probably have to increase production of non-GMO beans, which cost more to produce.” After being challenged he has softened his exaggerated conclusion from “the EU” to Germany and “they will have to switch” to will probably, but both neither makes sense for a limited market, Germany and the other EU non-GMO countries, when the 2018 crop is already in the ground, and its too early to seriously consider for later years.

            Clearly, 2slugs made a gross assumption, then slowly backed away when challenged. His major problem is as an alternative it makes almost no economic sense. By next planting season there will be other more viable options available to farmers, and his ignorance of the Ag business, especially farming, along with his arrogance has consistently shown his error in judgement.

          4. 2slugbaits

            CoRev Well, we’ve seen you play this game before. You’ve been caught trying to BS your way through a bogus claim and then you try and fog things over. Let’s start with the basics. My claim was that US farmers should not count on the EU market because most of the big economies did not import GMO soybeans, and most US soybeans are GMO. I also pointed out that the big economies are Germany, Italy and France. None of those three countries imports GMO soybeans. You disagreed and argued that the EU imports lots of US soybeans. Here are your own words:

            The EU has annually imported from ~13M to ~15M tons of US soybeans and GMO restrictions have been lifted on many grains for ~ a decade.

            To begin with, I have no idea where you came up with this 13M-15M tons figure, but it’s clearly wrong. You’re off by a longshot. See this USDA table that shows US exports of soybeans in dollar value and metric tons by calendar year.
            Go to line 165, column D of the tab entitled “US Exports to the EU”. It shows that the EU (that’s 28 countries!!!) have imported less than 5M tons per year. But look at column G showing the dollar value. In 2017 the EU imported about ~$1.7B in US soybeans. Of the 28 nations in the EU, Germany imported the most and all of those were non-GMO. The next biggest importer was the mighty Netherlands, which imports both GMO and non-GMO beans. The other 26 EU nations collectively import well under $1B in US soybeans. So I’m sorry your argument has fallen flat on its face, because there’s simply no way that the EU market is anywhere near large enough to make up for more than a miniscule loss in the China market.

            You’re the only one here who is trying to slither away from his previous arguments. You do this all the time, as regular posters here know all too well. Now I understand that you’re probably emotionally upset over the capture and jailing of your comrade and lover Maria Butina (hey, I understand how she “worked” you NRA conservative types), but it’s still no excuse for gaslighting this blog.

          5. baffling

            and 2slugs returns to the ring for another beatdown of corev. this has been a couple of whippings this past month. but the spunky little loser keeps coming back for more!

          6. CoRev

            2slugs , baffled, and pgl, It takes some logic and math to estimate the actual market effects of the soybean tariffs on the EU market. I got my total 13-15M tons numbers here: and noticed I had translated total to mean US. My mistake!

            It requires both some math and logic to understand the impact of the tariffs on the EU market for soybeans. 2slugs want us to believe that for US farmers to sell to the EU they would have to shift to growing the more expensive non-GMO versions. He later softened the claim to sell to the large EU economies, but his point is wrong. Few US farmers will change to non-GMO soybeans, because they are more costly to produce and the market is much, much smaller than for GMO soybeans.

            The math is simple, Brazil’s supply of exportable soybeans will be exhausted about the same time as US harvest begin. As my chart shows EU demand should be ~15-16M tons annually. China has already made demands on the world supply while world demand has still been rising. So, where will the world and especially the EU have to go to fill that demand? Who again is the largest supplier of soybeans? So those non-GMO countries will be forced to either change their restrictions or go without. Of course there will be a large supply PERHAPS at a reduced price right there ready for shipment. For pgl that is the reality of supply and demand.

            As confirmation, WaPo had an article in Tuesday’s edition which confirms what we have been telling you that soybean farmers have not yet been hurt financially.–even-without-his-12-billion-aid-package/2018/07/30/c3340bb6-91bb-11e8-8322-b5482bf5e0f5_story.html?utm_term=.e6cbd1ce5db5

            Soem pull quotes: “But growers of soybeans — the single largest agricultural export to China, worth $12.4 billion — have largely escaped financial damage thus far,…”
            and for 2slugs re: farmers changing to non-GMO ““A lot of guys are skeptical of it. It’s not going to change the way we do business.””
            also “Soybean growers have been cushioned by the widespread use of forward contracts that allowed many to lock in high prices last spring, and analysts predict they will be buoyed at harvest by strong global demand for soybeans.”
            and finally re: why prices will rise and farmers’ profits are cushioned: “”The U.S. will be the only real source of soybeans in the world” by this October, Suderman said. “I would expect to see prices come up well before then.”

            Grain and oilseed farmers have other cushions, as well. Many are planning to store this year’s harvest until it becomes profitable to sellthough that option is not feasible for those with no storage or large operating expenses.”

            Just how much of this have we been saying? ALL OF IT!

        3. baffling

          it is truly baffling in todays age of science that any country would continue to ban GMO products. it is an enhanced gene in the plant or animal. mother nature does this every day through natural selection. we have simply sped up the process. fewer anti-science crowd would be helpful for the world. these GMO bans are complete ignorance.

          1. Patrick VB

            Baffling, You might well find this very baffling, but fortunately EU citizens (still) have the right to choose to not eat GM food and to not prop up a system of production that poisons the planet (soil and water) with ever increasing quantities of complexe combinations of pesticides/herbicides to underpin and expand the control of biotech multinationals (not all are US, they are also Swiss and German) on the world’s supply of food through patented monocultures that threaten consumers’ effective choice (risk of monopsony), as well as bio-diversity. Long live democracy and freedom of choice, Yay Europe!

          2. CoRev

            Patrick VB obviously you do not know that many of the genetic modifications is to lessen the need for pesticides/herbicides. “… EU citizens (still) have the right to choose to not eat GM food and to not prop up a system of production that poisons the planet (soil and water) with ever increasing quantities of complexe combinations of pesticides/herbicides to underpin and expand the control of biotech multinationals…”

            Having your beliefs is perfectly OK, until you demand others also have the same beliefs.

          3. Patrick VB

            CoRev, won’t get into the battle of the relevant scientific literature, but just link to this one:
            Finally,I’ll also just mention the other issue of the link between these frankencrops and endocrine disruptors: The subject is vast and technical, and I have no expertise in this area so I’ll go no further. Please do enjoy your freedom to eat these GM foods. I’m happy that my country allows me not to.

          4. baffling

            patrick, unless you are growing fully organic, then your argument applies to traditional ag product as well as gmo product. i have yet to see a farmer who has does not use pesticide/herbicide in their nonorganic product. and organic yield is lower-hurting the planet in comparison. i think you really need to revisit why you dislike gmo, as it appears your belief system is flawed.

      2. pgl

        Dude – he documented his reasoning here. Unless you have some contrary evidence, all you are doing is embarrassing your poor mom as usual.

      3. pgl

        I noticed you provided no source for your 15 million tons sold to the EU or any perspective. I’m calling you out as a liar on both scores. But try checking this source out for how much in dollars we exported and to where:

        Let me make this easy for you given your pathetic research skills. Total soybean exports = $22.2 billion. Soybean exports to China = $12.3 billion. Exports to Germany (largest importer in the EU) a mere $0.5 billion.

        Lord CoRev – your attempts to defend Trump’s trade war are getting more dishonest and stupid by the hour.

        1. Bruce Hall

          pgl, the trade with the EU goes well beyond mere soybeans. While the US imports more from China than the EU, it exports more to the EU than China.

          If the US and EU eventually agree upon no tariffs on non-automotive trade, there may be significant opportunity for US non-soybean/non-automotive products. It certainly comes a lot closer to “free trade” than anything presently occurring outside of NAFTA.

          1. 2slugbaits

            Bruce Hall If the US and EU eventually agree upon no tariffs on non-automotive trade, there may be significant opportunity for US non-soybean/non-automotive products.

            That would be fine. But why exclude automotive trade? Why should the US still have a 54 year old 25% tariff on light truck imports?

            I’m curious though. Do you really believe that Trump is a free trader? He’s argued against free trade for 30+ years. Everything we know about Trump tells us that he thinks other countries should remove all of their trade barriers, but the US should keep its trade barriers. That’s been his position since the 1980s.

          2. pgl

            “If the US and EU eventually agree upon no tariffs on non-automotive trade”.

            A big if – even conservative economist John Cochrane doubts this. Check out his reasoning over at his blog Grumpy Economist.

            You know if I were 7 feet 3 inches, I could play center for the Lakers. If there were no tariffs – right!

          3. Barkley Rosser


            Do not expect any actualmove to zero tariffsbetween US and EU any time soon. The only things that are happning any time soon might be some increase in soybean exports to EU and then a non-event: Trump will not raisr tariffs on EU cars, something opposed by the US auto industry anyway.

            Der Spiegel has just had a report. For these negotiations to even begin that were announced at the meeting, there has tobe an approval by all the member nations of the EU and also the European paerliament. This will not happen before the end of the year. That is just toget negotiations started. A lot of people, including columnist Mark Thiessen in today’s WaPo, are under the delusion that Trump and Juncker can just wave magic wands and, poof! all those tariffs disappear! Not how this works.

            It is being conveniently ignored that back in 2013 the US and EU announced something almost identical, a negotiation to bring most tariffs to zero between the EU and the US. That became known as the Transatlantic Trade and Investment Project (TTIP), which had 15 wee long negotiations on 28 topics between July 2013 and October 2016, with not one of the 28 items fully agreed upon. There are lots of details in these things not subject to magic wands.

            So Trump shut down TTIP, calling it “one of the worst trade deals ever.” Make no mistake, this announcement is essentially for a revived TTIP but under another name. The target date for completion of TTIP before it got shut down was 2021. So, sorry Bruce and all those others proclaiming some about-to-happen zeroing out of tariffs between EU and US. If it does happen, it will not even be in Trump’s term ending 2020, whoever is president after that, no matter how hard they try.

          4. Moses Herzog

            Bruce Hall
            It has already been explained, on a kindergartner level I might add, that there is no way the EU can match China’s demand for soybeans and China’s demand for a multitude of other products. So if trump’s plan is to exchange Chinese consumer demand for EU consumer demand (which Orange Excrement’s actions thus far strongly imply), that’s pretty much like you saying you’re going to resign from your job because your child offered to toss in part of his McDonald’s cashier salary to the family income.

        2. CoRev

          Komrad pgl, needs to lie again trying to make a point: “Exports to Germany (largest importer in the EU) a mere $0.5 billion.” Largest importer of???? not soybeans. I know how confusing these subject can be for you, but you originally responded to the comment re: GEE-EMM-OHH (spelled it out for you) comment, and that Germany had not ert approve GEE-EMM-OHH soybeans.

          Don’t you know how to read your own source while carrying through the logic of a comment string? Sad rfeally that you make cit necessary to correct your lies.

          1. pgl

            More gas lighting. I would ask you to make a point but we are about 20,000 of your posts now and we can conclude one thing. Every thing you write is pointless.

          2. pgl

            “Largest importer of???? not soybeans. ”

            Notice CoRev is incapable of naming a single EU nation that imported more than $0.5 billion of soybeans last year. Hey CoRev – France is a big nation. Check Census if you wish but be warned I already did.

            Seriously CoRev – if you want to call someone a liar at least provide the evidence that they misrepresented. Oh wait – you can’t. Run along little angry troll.

          3. pgl

            From here out, I guess we need stories with pretty pictures given you cannot read the English language. This is a very good story on the changing pattern of soybean sales globally. Notice the chart which shows China is buying 95 million metric tons from US as compared to your 15 million metric tons sold to the EU. The picture is clear and the difference is yuuuuge.


            Now if you still cannot grasp the simple point – show this to your preK teacher. Maybe she can explain it to you. Or maybe she will just flunk you out for another year!

          4. CoRev

            Angry Komrad pgl, caught lying again, eh? Here’s a hint look for a table of the top 5 importers of US soybeans. Look for Germany. Since you seldom actually do any research just attack others, do your own for a change.

  8. Not Trampis

    ho hum,

    I wait for the ‘revisions when actual date replace forecasts.
    no other country releases such an estimate ( I think)

    1. Alan Goldhammer

      The numbers are just as good as quarterly earnings projections from US corporations! 🙂

    2. Jake formerly of the LP

      Speaking of revisions, several years were revised in this report, which showed GDP growth under Obama was generally better than 1st reported, especially 2011-2013. Incomes were also revised higher, which drives up the savings rate to a decent level.

      And because the previous years were revised up, 2017’s annual growth was actually revised down to 2.2%. Bigger question is what happens in Q3 with those inflated exports and lower inventories.

  9. joseph

    “Great second-quarter GDP report.”

    Where are the wage increases?

    CEOs and shareholders got their $1.2 trillion welfare handout. Where are the wage increases for everyone else?

    1. pgl

      I wonder how much of that rise in consumption came from luxury goods demand. Rodeo Drive is likely doing very well.

  10. pgl

    Wow – Trump’s Ag Sec. tells the truth but throws all you Trump cheerleaders under the bus!

    U.S. Agriculture Secretary Sonny Perdue told reporters at the G20 conference in Buenos Aires, Argentina on Saturday that the $12 billion bailout President Trump promised to farmers impacted by the trade war his tariffs triggered will not fully compensate for the income producers are set to lose. “Obviously this is not going to make farmers whole,” Perdue said, adding that the Trump administration is only promising to help the nation’s farmers this year and is not guaranteeing future support. “It’s for the 2018 crop. We do not expect to do this over a period of time.”

  11. joseph

    You know, it gets quite tiresome when too many economists look at just GDP growth. It’s lazy and elitist.

    The average worker doesn’t give a damn about GDP growth when all of the growth goes to the top 1%.

    According to the latest BLS report, over the last year median real earnings have gone down. Meanwhile the median hours worked has gone up. Think about that for a minute. Here we are in the midst of the longest economic expansion in history and workers are earning fewer dollars per week while working longer hours per week. That’s the sign of a very sick, distorted, screwed up economy. That should be the headline. But too many economists are lazy and indifferent.

    It is quite perverse to crow about “a great GDP report” that just shoves even more dollars into the pockets of those at top.

    1. 2slugbaits

      Well, working longer hours for fewer dollars sucks, but I guess you have to ask yourself if a weak GDP report would have shown even longer hours and even fewer dollars. Things can always be worse. There’s a cheery thought. What concerns me about this GDP number is that the spike is mostly due to a consumption driven bump in demand that comes at the expense of personal saving rates and disappointing investment numbers. This tells me that down the line we’re looking at chronically weak productivity numbers, which will only aggravate the longer hours/fewer dollars problem for the median worker. And long term Trump’s trade wars will hurt productivity as well. Weak state and local government spending signals cuts in education spending, so yet another long run productivity blow. Give the GOP enough time and every state will end up looking like Kansas and Mississippi.

      But all is not lost. Climate change has given us plenty of fires in the west and floods in the east. This could be a real opportunity to test the “broken windows” hypothesis. Will we see an investment boom in next quarter’s GDP numbers as we replace fixed investment destroyed by Mother Nature?

      1. PeakTrader

        It should be noted, there’s upward income mobility (e.g. more years at work or better jobs) and downward income mobility (e.g. retirements).

        And, there’s a surplus of low skilled workers and a shortage of high skilled workers, particularly when higher paying manufacturing jobs were offshored with a huge inflow of low skilled immigrants.

        1. PeakTrader

          Joseph says: “(U.S.) very sick, distorted, screwed up economy.”

          The U.S. is a relatively very healthy economy.

          Germany, for example, the strongest economy in Europe, has a per capita GDP over $10,000 a year lower, although it has a bigger manufacturing base and net exports, and higher taxes and prices.

          For a large economy, with over 300 million people, the U.S. has high per capita GDP, and leads the rest of the world combined in the Information and Biotech Revolutions, in revenue and profit.

          1. PeakTrader

            There are more opportunities in the U.S. for upward income mobility, even for low skilled workers:

            Here’s part of a 2013 article about CostCo:

            “The no-frills warehouse chain, Costco, pays its hourly workers an average of just over $20 an hour, compared to just under $13 at competitor Wal-Mart.

            Cesar Martinez, a 37-year-old fork lift operator, has worked at a Costco in North Carolina for 19 years. He makes $22.82 an hour, gets health benefits and a pension plan. He manages to save, and doesn’t worry about hospital bills for his daughter, who suffers from asthma.

            “That’s the reason why I’ve been here for so long,” he said. “The company gives you a decent wage and treats you with respect and takes care of you. That’s why we all give 100%.”

            Research shows that it pays to pay employees well, because satisfied workers are more productive and motivated, according to MIT Sloan School of Management professor Zeynep Ton, who focuses on operations management.

            “How many times have you gone to a store, and the shelves are empty or the checkout line is too long, or employees are rude?,” she said. “At Costco, you see a huge line that disappears in minutes.”

            The productivity translates into sales, she said.

            According to Ton’s research, sales per employee at Costco were almost double those at Sam’s Club, its direct warehouse competitor owned by Wal-Mart.”

          2. baffling

            it should be noted that costco caters to a different clientele than walmart and sams. full discloser, i am a costco member and stockholder. costco is almost always located in an affluent area with customers who are not strictly looking for the lowest price. costco sells quality merchandise, with few choices but the one i would choose anyways, and in bulk (typically more than i would like to buy). they are a well run business, i have no doubts, but they are not really the “bargain” shop people make them out to be. costco would not be so robust if they were to expand their services to less wealthy individuals and locations where theft would be a bigger problem.

      2. pgl

        Did Peaky even read the 1st two lines here?

        “Last week the Census Bureau released its annual report on household income data for 2016. Last year the median (middle) average household income rose to $59,149, a 4.1% increase over 2015 and a record high. The median average income adjusted for inflation is also at a record high, above the peak of $58,882 set in 2000. ”

        Yes – median real income was rising under Obama. Peaky wants to give Trump credit for this?

        I’m sorry Peaky but the White House is about to tell you “you’re fired”!

  12. pgl

    I have cut and paste the latest from CoRev in its entirety:

    July 29, 2018 at 11:40 am
    Angry Komrad pgl, caught lying again, eh? Here’s a hint look for a table of the top 5 importers of US soybeans. Look for Germany. Since you seldom actually do any research just attack others, do your own for a change.
    Notice he provided no link. And he questions people’s integrity and research skills? Can it get any better than this?

    Of course no one knows WTF CoRev’s point was. Not even CoRev knows what he is babbling about any more.

    C’mon CoRev – we all know you are beyond stooopid but do you have to remind us over and over again!

      1. pgl

        According to this, the Dutch imported $776 million of soybeans from us. Not a lot but a bit more than what the Germans bought:

        Nowhere close to the intellectual garbage we hear from CoRev. But the Dutch buys more of our soybeans than the Germans? Could this be due to the GMO issue 2slug raised which CoRev dismissed?

        Or is it the Dutch buying soybeans for re-export to Germany which allows for the practice of base erosion ala transfer pricing abuse?

        Of course either way – it does not matter in terms of the bizarre claim that the EU will rescue US farmers from this stupid trade war.

        1. 2slugbaits

          The Netherlands is kind of tricky. It’s only been the last couple of years that the Dutch imported a significant amount of US soybeans. It’s not the kind of market that US farmers should depend on, with volatility on the order of 1000%.

        2. 2slugbaits

          is it the Dutch buying soybeans for re-export

          Good question. Just a hunch, but the Dutch have deep historical and economic ties with various island nations in SE Asia, a likely re-export market. And not all of the Netherlands is situated on the European continent.

    1. CoRev

      Angry Komrad pgl, why do you even think your research returned the same data as mine? I deliberately chose not to provide the link to make you do a little research on your own, but it was only partially accurate. Luckily for you, you stumbled on the correct answer. Luckily, because as you claimed you had provided the link prior, but since the values are different, I can tell you were just lucky, and hadn’t even read nor understood you previous link. BTW, my link was updated to 7/12/2018 yours only to 2016.

      Here’s another hint about pgl’s reading comprehension and/or laziness. I even gave him the search argument: “the top 5 importers of US soybeans” and he found “Major countries of destination for U.S. soybean exports in 2016 (in million metric tons)“. Just a year plus off , and he thinks he found something of value.

      Pgl is laughable and his ego gets in his own way. C’mon pgl – we all know you are beyond stooopid but do you have to remind us over and over again you are a stooopid, arrogant, lying failure?

      Pgl, please keep up your efforts as they make for such a target rich environment.

  13. Not Trampis

    Your GDP numbers are hopeless. Very hard to get what the SAAR is . I think it is somewhere between 1.5 and 2.1 %. A far cry from the bastardised 4.!%.
    I do not have the time to look for the ‘correct’ version . What is it.

    I say again an annualised rate is crap!

  14. spencer

    Keep in mind that the GDP report only had one months data. Numbers for the other two months were estimated by BEA.
    So this GDP estimate may be subject to very large revisions.

  15. Julian Silk

    Dear Menzie and whoever else may read this,

    I stick with my views. Look at the Producer Price Index at There is a steady upward trend, marked by great volatility, since December 2015. Before then, you had no real slope to the trend, marked by a mean-reversion to between 0% and 1%, with especially big falls in 2015. You can claim this has nothing to do with Trump, but he is clearly not doing anything to stop the trend, unless you believe the tariffs, or such taxes as may be inflicted on offending companies, will actually lower prices. If you can do a simple regression of how PPI increase show up in CPI increases, with what lag, you will have a good idea of when this issue will become politically salient.


  16. joseph

    It’s worth noting that the Toddler in Chief yesterday projected GDP growth of 8 or 9 percent. And claimed that during his term he would not just balance the budget but would pay down the debt “like water.” This while his own OMB is projecting ballooning deficits of nearly a trillion dollars annually.

    It is time to recognize that Trump is suffering senility. It is astonishing the number of people who just look aside, pretending that the Emperor is not naked and in fact is handsomely clothed. I guess that sort of self-delusion is what it takes when your only objective is tax cuts for the rich.

    1. noneconomist

      Yeah. We’ll have 8-9% GDP growth the same year Giselle leaves Tom Brady for me.

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