Today, the BEA released updated estimates for GDP in the second quarter as well as their annual revision which can affect data going back several years. The report showed that GDP continued to grow at a strong pace in Q2, rising 3.0%, driven by strong consumer spending and business investment. Real GDI (gross domestic income, an alternative measure of economic output) growth was estimated to be 3.2% per quarter in the first half of the year, a large upward revision over the previous estimate of 1.3%, largely due to faster compensation growth. Over the last four quarters, real GDP growth was 3.0% and real GDI growth was 3.5%, both higher than they were a year ago. Today’s data reconfirm that the economy is continuing its strong performance, powered by a healthy labor market that is producing jobs and real income growth for American workers (see our recent blog on how the U.S. economy has defied forecasters expectations).
The revisions to earlier data provide an updated view on the performance of the US economy as it recovered from the COVID recession, revealing that the recovery was even stronger than previously known. Output growth is now estimated to have been higher over 2021-2023 (productivity growth—output per hour of work—is also likely to be revised up, but those data are not in this report). Further, real disposable personal income is now estimated to have grown faster since 2021, and implied that the historically low saving rate in the last quarter was substantially understated (5.2% currently vs. 3.3% previously).
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