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GDP (and Revisions) Confirms The Curves / by Jeffrey P. Snider via Alhambra Investments / 

Real Gross Domestic Product expanded by 2.54% in Q2 2017, below most estimates including the final one from the Atlanta Fed’s GDPNow model. That latter method was close once again in its final days (+2.8%), but earlier in the quarter was predicting GDP growth of 4.3%. That would have been like what many people were thinking after another awful first quarter, a meaningful rebound in the second that would give “reflation” a statistical boost suggesting at last some real economy action behind it.

With the July release of GDP estimates the BEA has as it does every year updated its benchmarks. As a result, Q1 2017 GDP was revised lower to 1.22% growth, meaning that for the first half of this year the US economy (as measured this way) expanded by just 1.89%; the same awful trend rather than “reflation.”

The most revealing aspects of these revisions was in how they treated the two parts (so far) of the “rising dollar” period. The first part up to Q3 2015 was revised higher, and therefore due to compounding GDP overall was revised up. The quarterly figure for the highly contentious Q1 2015, the one that gave the world “residual seasonality”, is now imagined to have been 3.19% rather than -0.20% for the so-called final estimate.


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