Q2 GDP has been revised upward again to 3.9%. Originally Q2 GDP was reported as 2.3% and then increased to 3.7%. The reason for the higher GDP revision is consumer spending was revised upward by over a quarter of a percentage point. Consumer spending was 62% of real GDP. The revision is yet another surprise since GDP is now 70% greater than the original estimate.
Q2 GDP has been significantly revised upward from 2.3% to 3.7%. Investment was dramatically revised upward as was spending by state and local governments. Consumer spending was a healthy 57.2% of real GDP. Also surprising was a lack of upward revisions in imports. Regardless, that is a 1.37 percentage point GDP revision, a 59% change from the advance report.
The Durable Goods, advance report shows new orders shot up by 2.0% in July. June showed a whopping 4.1% new orders increase. Core capital goods, showed a 2.2% monthly gain. Without transportation new orders, which includes aircraft, durable goods new orders would have increased by 0.6%. Motor vehicles & parts new orders gained 4.0% for the month.
The July 2015 ISM Non-manufacturing report shows a services sector growth blowout. The overall index increased by +4.3 percentage points, to 50.3%, a record high. The NMI is also referred to as the services index. New orders increased by 3.4 percentage points. Employment also had a blowout with a 6.9 percentage point increase.
For the second quarter GDP bounced back to 2.3%. The BEA revised the national accounts back three years and now Q1 GDP is 0.6% instead of the -0.2% previously reported. The revisions may have improved Q1 2015 Gross Domestic Product, but on average, lowered GDP for the last three years by 0.3 percentage points. From 2011 to 2014 real GDP was 2.0% instead of the previous average of 2.3%. That's quite a stunt in economic growth overall.
The Manufacturers' Shipments, Inventories, and Orders report shows factory new orders declined by -0.4% for April. That's not a good start for the second quarter although March new factory orders was a blow out of 2.2%. Durable goods new orders doubled down on it's previously published decline and dropped by -1.0%.
If is official. It happened. First quarter 2015 real GDP just went negative with a -0.7% contraction. Remember folks, two consecutive quarters of negative growth can make up an official recession. In reality the revision is a one percentage point slide. Psychologically speaking, contraction isn't too swift as it often pricks bubble minds that blow hot air all over as they deflate. The reason for the negative revision is imports.
The Durable Goods, advance report shows new orders declined by -0.5% in April. In March new orders increased 5.1% yet in February, new orders dropped by -3.5%. For April, transportation was the culprit as new orders in this category dropped -2.5%. Core capital goods, on the other hand, gained 1.0%. Without transportation new orders, which includes aircraft, durable goods new orders would have increased by 0.5%.
First quarter 2015 real GDP is a measly, pathetic 0.2%. That's quite disappointing, and just shavings and crumbs away from contraction. Consumer spending was less than half of the contribution Q4 brought and exports imploded. While some think this is a report to ignore, that economic growth will spring back, we think this is quite a foreboding of bad news.
The Manufacturers' Shipments, Inventories, and Orders report shows factory new orders declined by -0.2% for January. The reason was most likely oil as nondurable goods new orders plunged by -3.1%. Petroleum refinery shipments give another clue as they plunged by -11.6%. Durable goods new orders by themselves increased 2.8%.
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