US Q2 GDP grew 2.2%!

As usual, let's break down the GDP components to see what had happened in Q2.

GDP growth = G + I + C + NE

NE=Export - Import

Q1 GDP (Final) = 0.74 + 1.35 + 0.37+ (-0.37) = 2.09 (2.1)

Q2 GDP (1st estimate) = (-0.14) + 0.53 + 2.12 + (-1.01) = 1.5

Q2 GDP (2nd estimate) = (-0.16) + 0.48 + 2.31 + (-1.14) = 1.49 (1.5)

Q2 GDP (Final) = (-0.01) + 0.82 + 2.51 + (-1.1) = 2.22 (2.2)

After our GDP calculation, we can see that all the GDP components improved, particularly the Investment (I) and Consumption (C).  Why?

The GDP data showed that the US consumers were frontloading their purchases in view of the rising inflation caused by the Iran war and high oil prices.  This phenomenon caused C and I to increase because retail sales (C) and inventory buildup (I) were uplifted.  Fortunately, the core PCE (MOM) increased only by 0.2% (see below) instead of the projected 0.3%.  However, if the diesel prices in the US continue to stay skyhigh, many things will be affected later because many machineries, equipment and long haul truckers are using diesels to operate.