GDP Growth Better Than Earlier Believed

Real GDP growth for the second quarter was raised to an annualized rate of 2.5 percent compared to the initial estimate of 1.7 percent and compared to a fourth quarter rise of 1.1 percent. Expectations were for 2.2 percent.

The upward revision to GDP growth was mainly due to a sharp upward revision to net exports. Also, there were improvements to inventories and nonresidential structures investment.

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

Headline inflation rates when annualized remain quite tame.