Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  Real GDP Growth in Q2 was Revised to a 4.6% Annual Rate
Posted Under: Data Watch • GDP
Supporting Image for Blog Post

 
Implications: Forget about GDP for a moment. The most important news this morning was that economy-wide corporate profits were revised up for the second quarter, rebounding 8.4%. In particular, profits in the domestic non-financial sector rose 11.9% to a new record high. All of these profit numbers are calculated by government statisticians and include "capital consumption and inventory valuation adjustments." (Sorry for the jargon, but that's what they call it.) These adjustments don't affect cash flow. However, combined with the weather in Q1, they have made the profits data extremely volatile. Excluding the adjustments, overall corporate cash flow is at a record high and the highest share of GDP since the early 1950s. These figures support the case for optimism for equities in general as well as business investment. In terms of real GDP, the consensus got it exactly right, with an upward revision to a 4.6% annual growth rate in Q2. The upward revision from the prior estimate of 4.2% was unusually broad, with every major category of real GDP revised slightly higher. As a result, after declining in Q1, nominal GDP (real growth plus inflation) snapped back at a 6.8% rate in Q2, the fastest pace for any quarter since 2006. Nominal GDP is now up 4.3% from a year ago and up at a 3.8% annual rate in the past two years. These figures continue to signal that a federal funds rate of essentially zero makes monetary policy too loose. Regardless, the Federal Reserve won't start raising rates until next year. Plugging today's data into our models suggests real GDP is growing at about a 3% annual rate in Q3, still in the Plow Horse range.

Click here for PDF version
Posted on Friday, September 26, 2014 @ 10:36 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
 PREVIOUS POSTS
New Orders for Durable Goods Fell 18.2% in August
New Single-Family Home Sales Boomed 18.0% in August
Existing Home Sales Declined 1.8% in August
Two Sides to Every Coin
Housing Starts Declined 14.4% in August
Rate Hikes Approaching
The Consumer Price Index Declined 0.2% in August
The Producer Price Index was Unchanged in August
"Low" Foreign Rates Won't Keep US Rates From Rising
Industrial Production Declined 0.1% in August
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.