US real GDP rises 4.1% in Q2 2018

30 Jul '18

3 min read

Courtesy: Burak Kebapci from Pexels

The US real gross domestic product increased at an annual rate of 4.1 per cent in the second quarter (Q2) of 2018, according to the ‘advance’ estimate released by the Bureau of Economic Analysis. Imports, which are a subtraction in the calculation of GDP, also increased. In the first quarter, real GDP increased 2.2 per cent, as per the revised estimate.

The increase in real GDP in the Q2 reflected positive contributions from personal consumption expenditures (PCE), exports, non-residential fixed investment, federal government spending, and state and local government spending that were partly offset by negative contributions from private inventory investment and residential fixed investment.

Current-dollar GDP increased 7.4 per cent, or $361.5 billion, in the second quarter to a level of $20.4 trillion. In comparison, current-dollar GDP increased 4.3 per cent, or $209.2 billion in the first quarter.

The price index for gross domestic purchases increased 2.3 per cent in the second quarter, compared with an increase of 2.5 per cent in the first quarter. The PCE price index increased 1.8 per cent, compared with an increase of 2.5 per cent. Excluding food and energy prices, the PCE price index increased 2.0 per cent, compared with an increase of 2.2 per cent.

Current-dollar personal income increased $183.7 billion in the second quarter, compared with an increase of $215.8 billion in the first quarter. Decelerations in wages and salaries, government social benefits, personal interest income, and non-farm proprietors’ income were partly offset by accelerations in personal dividend income and rental income, a deceleration in contributions for government social insurance (a subtraction in the calculation of personal income), and an upturn in farm proprietors’ income.

Meanwhile, disposable personal income increased $167.5 billion, or 4.5 per cent, in the second quarter, compared with an increase of $256.7 billion, or 7.0 per cent, in the first quarter. Real disposable personal income increased 2.6 per cent, compared with an increase of 4.4 per cent.

Personal saving was $1,051.1 billion in the second quarter, compared with $1094.1 billion in the first quarter. The personal saving rate, i.e. personal saving as a percentage of disposable personal income, was 6.8 per cent in the second quarter, compared with 7.2 per cent in the first quarter.

The Bureau, however, emphasised that the second-quarter advance estimate is based on source data that are incomplete or subject to further revision by the source agency. The ‘second’ estimate for the second quarter, based on more complete data, will be released on August 29, 2018.

The estimates also reflect the results of the 15th comprehensive update of the National Income and Product Accounts (NIPAs). (RKS)

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