US Final Revised Q2 GDP to Stay Unchanged

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The final revised GDP figures for the second quarter will be due today with no changes expected.

Economists maintain that the second-quarter GDP will rise by 2.0%, unchanged from the second estimates released a few weeks ago.

From a market standpoint, the data is also unlikely to have a big impact, with the third quarter activity underway.

However, the GDP price index, which is a measure of the changes in the price of goods and services, is due for a revision. Economists expect to see a revised GDP price index of 0.8%.

U.S. GDP
U.S. GDP, Q2 2019

This marks a strong downside revision compared to 2.4% as previously reported.

Yet, consumer spending remains one of the key drivers for the GDP numbers.

Data shows that consumer spending grew 4.7% in the April through June period. This was a big upside revision following the initial estimates of 4.3%. Consumer spending also marked the biggest increase since 2014.

Consumer spending contributes to nearly two-thirds of the US economic growth. One of the reasons for this is due to the strong employment figures.

Despite some ups and downs, the US labor market remains one of the key aspects of growth.

The unemployment rate in the U.S. stands at 3.7% which remains near historical lows.

Impact of Trump’s Trade Wars

While economists have been expecting to see a slowdown due to the trade wars, evidence suggests otherwise. Exports were down 5.2% from 5.8% previously, and it is likely that this print will remain unchanged.

The data, according to the second revised estimates show that the impact of the US-China trade war remains minimal at best.

Both sides are currently agreeing to a trade truce and fresh round of talks due to start in October.

As a result, the risks of downside revision remain tame for the moment.

Final Revised GDP Report to be Brushed Aside

The release of the GDP report tends to have a major market-moving impact.

However, considering that the dataset is for the second quarter, investors will not be reading too much into it.

Further to the above, the fact that the estimates also point to no change in the GDP, the data will be overlooked.

With September coming to an end, investors will be looking to see how the Q3 GDP report comes out. We are still a few weeks away from the initial estimates.

But so far, forward-looking indicators and GDP trackers show that the third-quarter GDP will also average around 2.0%.

While on the one hand, this would mark sluggish growth, the data will still be seen as somewhat positive. At the start of the year, during the height of the trade tensions, economists forecast that GDP would slow towards the end of the year.

However, given the preliminary data already available for the first two months of the third quarter, the third quarter report could be slightly better than expected.

With the Federal Reserve lowering rates once again, there is a good chance for the economic activity to improve. However, a lot will depend on the main uncertainty which comes from the US and China trade disputes.

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