U.S. second-quarter GDP growth revised to 2.2% annual rate

US real GDP grew at a 2.2 per cent annual rate in the second quarter, the BEA’s third estimate reports, following revised first-quarter growth of 2.5 per cent. The quarter-to-quarter increase itself was 0.6 per cent.

Annualisation expresses a quarterly pace on a yearly basis. The 2.2 per cent figure should therefore remain labelled as annualised, rather than being presented as the amount output increased during the quarter.

The estimate was revised up 0.7 percentage points as investment, consumer spending and government spending estimates increased. Real final sales to private domestic purchasers grew 4.6 per cent at an annual rate, revised up 0.4 percentage points. That measure provides a separate view of private domestic demand.

Consumer spending, investment and exports contributed to GDP growth. Imports increased as well and are subtracted in the calculation to exclude production occurring abroad. Their accounting treatment is not a finding that all imported goods reduce welfare.

Private services value added increased at a 2.5 per cent annual rate, private goods 2.3 per cent and government less than 0.1 per cent. Leading contributors included real estate and rental, information, durable manufacturing and finance. Transportation and warehousing, retail and nondurable manufacturing offset some growth.

Real gross output increased five per cent, with services up six per cent, goods three per cent and government 2.6 per cent. Gross output includes intermediate production used by other producers. GDP measures value added, avoiding counting those inputs again as final domestic output.

The industry findings therefore add a composition account to the national growth number, while gross output supplies a different production measure. Neither should be substituted for the headline GDP rate.

Real GDI grew 2.6 per cent, revised up 0.4 percentage points. The average of GDP and GDI grew 2.4 per cent, revised up 0.6 percentage points. GDP measures production through expenditure and GDI through income; their estimates can differ because they use different source information.

Corporate profits increased US$384 billion. The reported increase was revised down US$16.9 billion, so the revision concerns the size of the increase, not a declaration that profits fell by that amount or that total profits were US$384 billion.

The gross domestic purchases price index increased at a 5.6 per cent annual rate, revised down 0.2 percentage points. PCE prices rose five per cent and core PCE 3.3 per cent, each revised down 0.3 percentage points. These are quarterly annualised price rates, distinct from monthly year-over-year inflation readings.

Real GDP increased in 44 states and DC, ranging from New York’s four per cent growth to West Virginia’s 2.3 per cent decline. Finance contributed to growth in New York and Delaware; mining weighed on West Virginia and Wyoming.

State personal income increased US$314.3 billion, or 4.7 per cent annualised, with gains in 49 states and DC. Wisconsin grew 6.4 per cent, while North Dakota declined 4.2 per cent.

Earnings rose in 48 states and DC, with Minnesota up 7.3 per cent and North Dakota down 9.3 per cent. Transfer receipts rose in 48 states and DC, including Wisconsin up 13 per cent and Oregon down 3.9 per cent. Property income increased in every state, ranging from Tennessee’s 5.1 per cent to Iowa’s 3.3 per cent.

The release also includes a separate annual consumption account for 2025: spending increased 5.3 per cent nationally and in every state, with gains in 14 of 16 categories. Florida rose seven per cent and California 4.2 per cent; health care and housing/utilities were leading contributors. Those annual figures should remain separate from quarterly 2026 GDP.

The annual update revised estimates from the first quarter of 2021 through the first quarter of 2026, using improved source data and seasonal factors while retaining 2017 as the reference year.

First-quarter GDP grew 2.5 per cent, revised up 0.4 percentage points; private domestic final sales rose 1.8 per cent, up 0.1 percentage points. GDI grew 2.5 per cent, revised up 1.3 percentage points, and the GDP/GDI average 2.5 per cent, up 0.8 percentage points. The first-quarter profits increase was US$63.4 billion, revised down US$11 billion.

Second-quarter revisions drew on Census and USDA inventory data, updated data-centre construction and residential-improvement information, BLS data, services and retail revisions, and defence seasonal adjustments. Recreation and other services were revised higher; air transport was revised lower.

The third-quarter advance estimate was scheduled for October 29. The current account measures domestic production and associated income, not the distribution of living-standard changes among households.