While the 1.2% Q2 GDP print was so bad that it sent both oil and stocks higher, now that bad news is again good news as it means no Fed rate hikes for the foreseeable future, a key reason for the weakness was the adjustment of historical data as part of the BEA’s annual data revision.
As the BEA announced, “the estimates released today reflect the results of the annual update of the national income and product accounts (NIPAs) in conjunction with the “advance” estimate of GDP for the second quarter of 2016. The update covers the first quarter of 2013 through the first quarter of 2016. For more information, see “Information on the 2016 Annual Update” on BEA’s Web site.”
The revision dragged down all recent GDP prints, going back all the way to Q3 2015, and as a result, over the last 4 quarters real GDP has now increased a paltry 1.2%, confirming that low oil prices were far worse for the economy than economists predicted, driven by the collapse in CapEx spending. The full summary is shown below.
With this latest shock, we can now calculate that the US has to growth at a rate of over 4% in the second half to match last year’s 2.6% GDP growth.
Meanwhile, the breakdown of GDP components courtesy of Bloomberg, can be found in the next table.
via http://ift.tt/2amWfPh Tyler Durden