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The Latest Revision To Q2's Historically Bad GDP Number: What You Need To Know

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The Latest Revision To Q2's Historically Bad GDP Number: What You Need To Know

Real second-quarter gross domestic product fell 31.7% at an annualized rate, according to the second estimate released Thursday by the Bureau of Economic Analysis.

What Happened: The GDP figures are updated to reflect new information used to calculate GDP. In the advance estimate released last month, the second-quarter decrease in real GDP was 32.9%.

The second estimate shows that private inventory investment and personal consumption expenditures decreased less than previously estimated.

After increasing 3.1% during the fourth quarter of 2019, real gross domestic income experienced a 4.3% decrease during the first quarter. 

Real GDP is the inflation-adjusted value of the goods and services produced by labor and property located in the United States.

Why It’s Important: Despite the slight improvement, the second-quarter GDP estimate remains the worst in recorded history.

Imports and exports both saw decreases; the price index for gross domestic purchases decreased 1.5% in the second quarter.

These decreases affected profits, with profits from current production — corporate profits with inventory valuation and capital consumption adjustments — decreasing $226.9 billion in the second quarter.

What’s Next: The large decrease in second-quarter GDP was expected after the coronavirus pandemic paralyzed the economy.

Falling imports and exports could lead to a sustained decrease that bleeds into future quarters. 

The third estimates for second-quarter GDP are set for release Sept. 30.

 

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