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Macro Flash Report

Gross Domestic Product (GDP)

Takeaway:

The second revision for Q2 2024 GDP underscores a stable consumer as the primary driver of economic growth, while all other components were revised lower. Going forward, we anticipate further cooling on the consumer side. However, other areas like fixed investment, business spending, and inventories are likely to improve as interest rates begin their decline.

 

QoQ GDP % – Personal Consumption, Inventories, Investment, Net Exports, Government

The second revision for Q2 2024 GDP show that the U.S. economy grew at an annualized rate of 3.0%, up from the initial estimate of 2.8% and a notable increase from 1.4% in Q1. This growth was primarily driven by resilient consumer spending, which more than offset the downwardly revised categories.

Key revisions:

  • Consumer spending rose by 2.9% vs 3%, the primary driver of this boost.
  • Nonresidential fixed investment grew by 6% vs 5.2% and residential investment declined by -2.0% vs -1.4%.
  • Government spending saw reductions at both federal (3.3% vs. 3.9%) and local (2.3% vs. 2.6%) levels.
  • Business spending, inventories, and net exports were also downwardly revised.
  • Gross domestic income (GDI) (an alternate measure of economic growth) increased 3%, matching Q1’s gain.

Looking ahead, the economy is expected to moderate for the rest of 2024 as high borrowing costs continue to filter through, with the Atlanta Fed GDPNow forecast estimates Q3 2024 GDP growth at 2.0% as of August 26th. However, with the Fed planning to lower interest rates next month, sectors heavily burdened by high borrowing costs, such as housing and manufacturing, may start seeing some relief.