MT Insider: U.S. Economics - Q2 GDP of 1.7% Beats, But Not By Enough to Meet Fed GDP Forecast For 2013
Bottom line, on an annualized basis, Q2 GDP of 1.7% translates into a real GDP of 1.4% for the first half of 2013. Critically, this means that based on the current run rate, it is unlikely to meet the Fed's 2.3% to 2.6% growth projection for 2013.
Q2 real GDP came in at 1.7%, above consensus of 1.0% (and whispers of less than 1.0%). By component, personal consumption grew 1.8%, slightly above the street while non-residential fixed investment increased 4.6% and residential investment increased 13.4%.
Worth noting, federal spending declined by a modest 1.5% as the defense sector seems to have stabilized (in comparison to the larger declines in the sector seen in prior quarters).
The trade deficit widened given that imports came in higher than exports, subtracting from Q2 GDP growth, but this was offset by an uptick in inventory accumulation.
Separately, note that the updated forecasts will not be in today's fed release at 2PM ET, but it will likely be incorporated into the Fed's 2013 forecast in September.
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