US: Real GDP grows at an annual rate of 2.1% in Q2, revised from 2.4%

The US economy expanded at an annual rate of 2.1% during the second quarter, a reading that came in below the previous estimate of 2.4%. “The updated estimates primarily reflected downward revisions to private inventory investment and nonresidential fixed investment that were partly offset by an upward revision to state and local government spending”, said the Bureau of Economic Analysis. In the first quarter, real GDP increased 2.0%.

The Personal Consumption Expenditure (PCE) Price Index increased 2.5%, a downward revision of 0.1 percentage point from the previous estimate. Excluding food and energy prices, the PCE price index increased 3.7 percent, a downward revision of 0.1 percentage point.

Key takeaways: 

Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the second quarter of 2023, according to the "second" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 2.0 percent.

The increase in real GDP reflected increases in consumer spending, nonresidential fixed investment, state and local government spending, and federal government spending that were partly offset by decreases in exports, residential fixed investment, and private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased.

With the second estimate, downward revisions to private inventory investment and nonresidential fixed investment were partly offset by upward revisions to state and local government spending, exports, consumer spending, federal government spending, and residential investment. Imports were revised up.”

Current‑dollar GDP increased 4.1 percent at an annual rate, or $268.6 billion, in the second quarter to a level of $26.80 trillion, a downward revision of $36.3 billion from the previous estimate.

The price index for gross domestic purchases increased 1.7 percent in the second quarter, a downward revision of 0.2 percentage point from the previous estimate.

The PCE price index increased 2.5 percent, a downward revision of 0.1 percentage point. Excluding food and energy prices, the PCE price index increased 3.7 percent, a downward revision of 0.1 percentage point.

Market reaction

The US Dollar experienced fresh daily losses across the board following the release of the GDP report. It was already weak due to the ADP Employment figures. As of writing, the DXY trades at 103.20, down 0.25% for the day, at its lowest intraday level in a week.