The economic performance data for a given quarter is always subject to revisions as more data becomes available, giving a more accurate picture of how the economy has performed. Initial estimates suggested that US GDP in Q2 came in at 1.7% (on an annualised basis). This figure was revised upwards to 2.2% and has now been further revised to 2.5%; more than twice the preliminary estimate. This suggests that the US economy is recovering more strongly than thought; growth in the first quarter of the year came in at 1.8% finally (revised down from 2.4%).
Inevitably, it seems, any economic good news is seized on to produce troubling anxiety over when the Federal Reserve will start to “taper” its $85 billion per month stimulus package – despite the fact that the Fed has consistently linked this gradual process to declining unemployment beyond the 6.5% trigger level.
The revised data includes some encouraging figures for growth in key economic sectors (albeit from a low base). For example, house construction increased at an annualised rate of 12.9%, marking four straight quarters of double digit growth (the sector all but collapsed at the worst stage of the Global Financial Crisis, of course).
The annualised business investment figure was also revised upwards to stand at 16.1%. In a further sign of more buoyant economic conditions, data from retailers suggested that restocking of shelves enjoyed a faster pace in Q2 than had been reported. This suggests that consumer demand had strengthened; a key indicator since approximately 70% of all US economic activity is consumed by the domestic market.
The prognosis from economic experts is that full year growth will come in at about 2.5% with steady improvement in the employment situation and lower influence from the Sequester cuts.