U.S. Q2 GDP 3.8% 'surprising growth'…revision raised by 0.5 percentage points

JOON HYOUNG LEE

Summary

It reported that the U.S. Q2 GDP growth rate was confirmed at 3.8%, higher than experts' forecasts and previous releases.
After Q1's contraction, in Q2 a decline in imports due to a reduction in temporary inventory-building factors was cited as a major growth driver.
It noted that the U.S. reports GDP growth by annualizing the final estimate and that investors should pay attention to this.

The U.S. economy, which contracted in Q1 this year, recorded a larger-than-expected expansion in Q2.

The U.S. Commerce Department said on the 25th (local time) that the final estimate of U.S. gross domestic product (GDP) growth for Q2 this year was 3.8% (annualized quarter-on-quarter). This is an upward revision of 0.5% percentage points from the revised estimate (3.3%) released at the end of last month.

Compared with the advance estimate (3.0%) released at the end of July, it was revised up by 0.8% percentage points. It also far exceeded the 3.3% forecast compiled by Dow Jones.

Earlier, U.S. GDP contracted by 0.5% in Q1 as imports temporarily increased ahead of tariff imposition. The reduction of such temporary inventory-building factors, leading to a decrease in imports, is cited as the main reason the Q2 GDP growth rate recovered.

The U.S. releases GDP growth in three stages: advance, revised, and final estimates. The final estimate is calculated by incorporating economic activity indicators that were missing from the provisional estimates. Also, unlike South Korea, the U.S. publishes GDP statistics by annualizing the quarter-on-quarter growth rate.

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