GDP CRUSHES EXPECTATIONS

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The first look at Q2 U.S. GDP from the Bureau of Economic Analysis is out.

Growth was 1.7% at an annualized rate in the second quarter.  Economists expected GDP to rise only 1.0% in Q2.

Q1 GDP growth was revised down to 1.1% from 1.8%.

Personal consumption growth slowed to 1.8% in Q2 from a downward-revised 2.3% in Q1, also beating economists' consensus estimate of 1.6% growth.

Below is the full text of the release:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.7 percent in the second quarter of 2013 (that is, from the first quarter to the second quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.1 percent (revised).

The Bureau emphasized that the second-quarter advance estimate released today is based on  source data that are incomplete or subject to further revision by the source agency (see the box on page 3  and "Comparisons of Revisions to GDP" on page 18). The "second" estimate for the second quarter,  based on more complete data, will be released on August 29, 2013.

The increase in real GDP in the second quarter primarily reflected positive contributions from  personal consumption expenditures (PCE), exports, nonresidential fixed investment, private inventory  investment, and residential investment that were partly offset by a negative contribution from federal  government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP in the second quarter primarily reflected upturns in nonresidential  fixed investment and in exports, a smaller decrease in federal government spending, and an upturn in  state and local government spending that were partly offset by an acceleration in imports and  decelerations in private inventory investment and in PCE.

...

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 0.3 percent in the second quarter, compared with an increase of 1.2 percent in the first. Excluding food and energy prices, the price index for gross domestic purchases increased 0.8 percent in the second quarter compared with 1.4 percent in the first.

Real personal consumption expenditures increased 1.8 percent in the second quarter, compared  with an increase of 2.3 percent in the first. Durable goods increased 6.5 percent, compared with an  increase of 5.8 percent. Nondurable goods increased 2.0 percent, compared with an increase of 2.7  percent. Services increased 0.9 percent, compared with an increase of 1.5 percent.

Real nonresidential fixed investment increased 4.6 percent in the second quarter, in contrast to a  decrease of 4.6 percent in the first. Nonresidential structures increased 6.8 percent, in contrast to a  decrease of 25.7 percent. Equipment increased 4.1 percent, compared with an increase of 1.6 percent.  Intellectual property products increased 3.8 percent, compared with an increase of 3.7 percent. Real  residential fixed investment increased 13.4 percent, compared with an increase of 12.5 percent.

Real exports of goods and services increased 5.4 percent in the second quarter, in contrast to a  decrease of 1.3 percent in the first. Real imports of goods and services increased 9.5 percent, compared  with an increase of 0.6 percent.

Real federal government consumption expenditures and gross investment decreased 1.5 percent  in the second quarter, compared with a decrease of 8.4 percent in the first. National defense decreased  0.5 percent, compared with a decrease of 11.2 percent. Nondefense decreased 3.2 percent, compared  with a decrease of 3.6 percent. Real state and local government consumption expenditures and gross  investment increased 0.3 percent, in contrast to a decrease of 1.3 percent.

The change in real private inventories added 0.41 percentage point to the second-quarter change  in real GDP after adding 0.93 percentage point to the first-quarter change. Private businesses increased  inventories $56.7 billion in the second quarter, following increases of $42.2 billion in the first quarter  and $7.3 billion in the fourth.

Real final sales of domestic product -- GDP less change in private inventories -- increased 1.3 percent in the second quarter, compared with an increase of 0.2 percent in the first.

Gross domestic purchases

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever  produced -- increased 2.4 percent in the second quarter, compared with an increase of 1.4 percent in the  first.

Disposition of personal income

Current-dollar personal income increased $140.1 billion (4.1 percent) in the second quarter, in  contrast to a decrease of $157.1 billion (4.4 percent) in the first. The upturn in personal income  primarily reflected sharp upturns in personal dividend income and in wages and salaries and a sharp  deceleration in contributions for government social insurance (a subtraction in the calculation of  personal income).

* Personal dividend income increased in the second quarter, in contrast to a large decrease in the  first. The first-quarter decline in dividend income primarily reflected the accelerated and special  dividends that were paid by many companies in the fourth quarter of 2012.

* Wages and salaries increased in the second quarter, in contrast to a decrease in the first. The  first-quarter decline in wages and salaries is based on preliminary quarterly census of  employment and wages data from the Bureau of Labor Statistics.

* The sharp deceleration in contributions for government social insurance primarily reflected the  first-quarter expiration of the "payroll tax holiday" that increased the social security contribution  rate for employees and self-employed workers by 2.0 percentage points.

Personal current taxes increased $36.0 billion in the second quarter, compared with an increase  of $74.3 billion in the first.

Disposable personal income increased $104.1 billion (3.4 percent) in the second quarter, in  contrast to a decrease of $231.5 billion (7.2 percent) in the first. Real disposable personal income  increased 3.4 percent, in contrast to a decrease of 8.2 percent.

Personal outlays increased $44.7 billion (1.5 percent) in the second quarter, compared with an  increase of $98.7 billion (3.4 percent) in the first. Personal saving -- disposable personal income less  personal outlays -- was $553.4 billion in the second quarter, compared with $494.0 billion in the first.

The personal saving rate -- personal saving as a percentage of disposable personal income -- was  4.5 percent in the second quarter, compared with 4.0 percent in the first. For a comparison of personal  saving in BEA’s national income and product accounts with personal saving in the Federal Reserve  Board’s flow of funds accounts and data on changes in net worth, go to  www.bea.gov/national/nipaweb/Nipa-Frb.asp

Current-dollar GDP

Current-dollar GDP -- the market value of the nation's output of goods and services -- increased  2.4 percent, or $98.1 billion, in the second quarter to a level of $16,633.4 billion. In the first quarter,  current-dollar GDP increased 2.8 percent, or $115.0 billion.

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