US Third Q2 GDP Estimate Revised to 1.4%

The US economy in its latest GDP in the Commerce Department’s third estimate of gross domestic product (GDP) posted a 1.4% growth in its second quarter. Analysts according to Bloomberg had earlier projected an increase of 1.3% in the value of all goods and services in the US for the last quarter. The latest estimate, which is still pending near term annual revisions, showed an unsurprising outlook of slow growth which has mostly been sustained by consumer spending.

Tony Bedikian, head of global markets at Citizens Bank stated that the, “Recent data on consumers, including a measure of confidence that rose to a post-recession high in September, should still bode well,” he also added that,  "I don't think there are any signs that the consumer will get derailed in the near or medium term”.

US Economic growth has held below a 1.5% pace for three consecutive quarters. The marked slowdown during an already sluggish expansion raised concerns that the economy was stumbling seven years after the recession ended. But many economists project output began to accelerate a bit this summer and should return to at least the expansion's average growth rate during the second half of the year. Similarly, payroll growth improved in recent months after a spring slump.

"Growth was weak in the first half of the year, we're seeing definite evidence that the economy is now expanding more strongly," Federal Reserve Chairwoman Janet Yellen said last week. Improved economic growth and progress in the labor market "have strengthened the case for an increase in the federal funds rate," she said. The central bank has held its benchmark interest rate steady since December.

Fed policymakers project the economy to grow at 1.8% pace for all of 2016, implying a modest second-half pick up. The Federal Reserve Bank of Atlanta, on Wednesday, forecast a 2.8% growth pace in the third quarter. The projection has been scaled back from well above 3% over the past month. Other data due out Thursday, including an inventories report, could alter third-quarter projections.

The second-quarter GDP report showed a measure of business spending, nonresidential fixed investment, rose at a 1% rate versus the prior estimate of a 0.9% decline. The upward revision was due to a much smaller decline in structures investment than previously estimated, and an increase in intellectual-property investments.

The US dollar gained some support following the data, although this also related to lower than expected jobless claims and better trade data with all three US releases stronger than expected. The EUR/USD dipped back to near 1.1200, while USD/JPY advanced to 101.75 from 101.45. US Treasuries moved lower only losses were still only around 4 ticks on the day, while US equity futures were slightly lower.