U.S. GDP shocker

What a shocker today's GDP report fromthe U.S. proved to be. And not just because the second quarter annualised growth rate came in well below expectations at 1.3 percent (1.8 expected), but also because the Bureau of Economic Analysis revised the numbers all the way back to 2003; especially the first quarter of 2011 (0.4 percent vs. 1.9 earlier) and the recession (-5.1 percent vs. -4.1 earlier) were among those hit hardest by the revision.

2Q2011 GDP Report Overview (QoQ annualised, pct.):

• GDP: 1.3 vs. 1.8 expected and 0.4 prior (revised from 1.9).
• PCE: 0.1 vs. 0.8 expected and 2.1 prior (revised from 2.2).
• GDP Price Index: 2.3 vs. 2 expected and 2.5 prior (revised from 2)
• PCE Core Price Index: 2.1 vs. 2.3 expected and 1.6 prior.
• Private Investment: 7.1 vs. 3.8 prior.
• Exports: 6 vs. 7.9 prior.
• Imports: 1.3 vs. 8.3 prior.
• Government consumption: -1.1 vs. -5.9 prior.

While GDP was hit by the higher than expected GDP Price Index it does not explain all out the weakness on display in the report. Personal Consumption Expenditures (i.e. PCE) contributed just 0.07pp to GDP, the weakest contribution since June 2009, which was the last quarter of the Great Recession. Private Investment, meanwhile, added 0.87pp to GDP while Net Exports chipped in with another 0.58pp. Government consumption reduced GDP by 0.23pp (the third negative contribution in a row).

Overall, GDP was weak on its own, but combined with the revisions it was downright abysmal.