Will US Q2 GDP challenge the 3% growth mark?
US Gross Domestic Product (GDP) will be released on Thursday morning. Bloomberg has the consensus economist estimate as a gain of 2.9% for the second quarter, with a range from economists of 1.9% to 3.5%. It may seem unexciting with a 2.9% gain expected versus a 3.0% unofficial target of a normal growth pattern, but it would compare to the final first quarter GDP reading of -0.2%.
Leadership is expected to come from a rebound in consumer spending, followed by residential investment. Investors should not be surprised at all when they see weak readings around the exports component of GDP this week as that pesky US dollar strength is making US exports less and less competitive on a global scale. In fact, major companies keep signaling how revenue and earnings are being eaten up foreign exchange.
Monday’s report of a stronger than expected Durable Goods orders might have given some cover for stronger than expected GDP. Unfortunately, the same amount that the June report beat expectations by was roughly the same worsening that the May reports were revised by. The new orders under Durable Goods rose 3.4% for the big ticket items, boosted by aircraft orders, computers, motor vehicles, and in machinery and fabricated metals.
Each report on GDP is meant to act as the current yardstick measurement for how the overall economy is growing. It effectively covers every sector of the US economy, but it has a massive exposure of roughly 70% around consumer spending.
GDP reports matter, but much of the data has been seen that influences those reports. The GDP’s first estimate is also given two revisions and the socalled Final GDP report is often very different from the initial view on GDP.