Summary
Later this week, the Commerce Department will release its third ("final") estimate of second-quarter 2005 gross domestic product. Overall, the results should not vary much from the "preliminary" estimate, released at the end of August. Here are some numbers against which to measure this week's release.
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On August 31st, the Commerce Department released its second or "preliminary" estimate of second-quarter gross domestic product. That report indicated that real GDP expanded at an annual rate of 3.3% during the June quarter, slightly lower than the 3.4% rate reported in the first ("advance") estimate, released at the end of July. The consensus estimate for this week's final estimate is 3.3%, or no change from the most recently published number.
I point out the obvious -- these are pre-Katrina data. Nevertheless, it is important to keep track of them, since they will serve as baseline numbers to help assess the impact this natural disaster had on late third-quarter economic activity. The Commerce Department is schedule to release its first estimate of third-quarter GDP on 10/28.
Of course, there will be a great deal of lagged economic impact from Katrina, now from Hurricane Rita, too. This will add to the importance of all major economic releases covering activity in September and beyond.
To provide a backdrop for this week's release, following are some of the reported differences between the Commerce Department's first and second GDP estimates (released 7/29 and 8/31, respectively).
The most recent estimate of second-quarter GDP indicated growth that was $3.4 billion less (at an annual rate) than the prior estimate. Two of the six primary GDP categories added to real growth in the "preliminary" versus the "advance" estimate. In order of their dollar contribution, these were:
(1) Inventory change (+$9.0 billion),
(2) Government spending (+$3.4 billion).
One primary GDP category, residential fixed investment (housing), was reported as unchanged.
The three primary GDP categories subtracting from growth were:
(1) Nonresidential fixed investment (capital
spending, minus $1.7 billion),
(2) Personal consumption expenditures
(minus $5.1 billion),
(3) Net exports (minus $9.9 billion), by virtue of
a reported widening in the trade deficit by
that amount).
The following table breaks out in greater the numbers discussed above.
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PRELIMINARY ESTIMATE OF SECOND-QUARTER 2005
REAL GROSS DOMESTIC PRODUCT (Released
8/31 -- Billions of 2000 Chained Dollars
at Seasonally Adjusted Annual Rates)
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2Q2005 1Q2005 Change/
Prelim. Final Impact
------------------------
Real GDP 11088.6 10999.3 3.3%
Inventory Change 2.6 58.2 -$55.6
Real Final Sales 11084.3 10940.3 5.4%
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Components of GDP
-----------------
Personal Consumption 7823.3 7764.9 3.0%
Nonres. Fixed Investment* 1277.8 1252.2 8.4%
Resid. Fixed Investment 597.9 584.1 9.8%
Net Exports -611.2 -645.4 +$34.2
Government Purchases* 1985.0 1971.9 2.7%
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Implicit Price Deflators:
Gross Domestic Product 2.5% 3.0% --
Gross Domestic Purchases 3.2% 2.9% --
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*MEMO ITEMS
-----------
Government Purchases
--------------------
Total 1985.0 1971.9 2.7%
State & Local 1250.1 1239.8 3.4%
Federal 734.7 731.8 1.6%
National Defense 490.2 487.3 2.4%
Nonresidential
Fixed Investment
----------------
Total 1277.8 1252.2 8.4%
Structures 252.7 251.0 2.7%
Equipment & Software 1039.6 1014.2 10.4%
Info. Processing
Equip. & Software 583.5 565.1 13.7%
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MAJOR GDP COMPONENTS -- CHANGES BETWEEN
"PRELIMINARY" AND "ADVANCE" 2Q2005 ESTIMATES
(Billions of 2000 Chained Dollars at
Seasonally Adjusted Annual Rates)
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2Q2005 2Q2005
Prelim. Advance Change
----------------------------
Real GDP 11088.6 11092.0 -3.4
Inventory Change 2.6 -6.4 9.0
Real Final Sales 11084.3 11096.8 -12.5
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Personal Consumption 7823.2 7828.3 -5.1
Nones. Fixed Invest. 1277.8 1279.5 -1.7
Resid. Fixed Invest. 597.9 597.9 0.0
Net Exports -611.2 -601.3 -9.9
Govt. Purchases 1985.0 1981.6 3.4
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