Workers assemble built-in appliances at the Whirlpool manufacturing plant in Cleveland, Tennessee August 21, 2013. (Photo: Reuters)
The Atlanta Federal Reserve has revised its GDPNow Forecast amid strong economic data to 3.7% for the third quarter (3Q), up from 3.5% on August 9. The forecast for personal consumption expenditures increased from 1.91% to 1.97% after the U.S. Census Bureau report on U.S. retail sales.
U.S. retail sales not only bounced back in July, increasing by 0.6 and doubling the median economic forecast calling for 0.3, but there were also sizable upward revisions to the prior months. June retail sales were revised 0.5% higher, moving the overall to 0.3% from an initial reported -0.2%. In May, it moved to unchanged juxtaposed to the -0.1% initial reading.
While most readings of consumer spending were gaining steam, retail sales were weak until now. Consumer spending is now positive and in line with full employment. The previous months’ revisions will have a significant impact on final estimates for second-quarter (2Q) GDP, while July, as the GDPNow Forecast shows, will have a positive impact on 3Q GDP.
The Commerce Department initially estimated the U.S. economy grew at a healthy 2.6% annualized pace in the 2Q 2017, matching the GDP forecast. The rate of growth was more than double the 1.2% GDP rate posted in the first quarter.
The Census Bureau also said Tuesday business inventories for manufacturing and trade were $1,869.3 billion, up 0.5% (±0.1%) from May 2017. That also topped the median economic forecast and the higher-than-expected headline is likely to further boost 2Q GDP.
Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, are 2.8% (±0.2%) higher than levels in June 2016.
