Economy Watch: GDP, Consumer Sentiment
- Sep 29, 2014
Real U.S. gross domestic product increased at an annualized rate of 4.6 percent during the second quarter of 2014, according to the Bureau of Economic Analysis’ final estimate, which was released on Friday. It was a 360-degree turn from the weather-impaired first quarter, when real GDP decreased 2.1 percent.
The GDP estimate is based on more complete source data than were available for the second or preliminary estimates. In the second estimate, the increase in real GDP was tapped at 4.2 percent. Despite the even stronger numbers for the final estimate, the general pattern of economic growth in the second quarter remains about the same as previously reported.
Namely, the increase in real GDP during the quarter was because of higher personal consumption expenditures—the BEA term for people spending their money—exports, private inventory investment (businesses spending theirs), nonresidential fixed investment, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
Consumer Sentiment Up from August to September
The final Reuters/University of Michigan consumer sentiment index for September came in at 84.6, according to the university on Friday, unchanged from the mid-month reading of 84.6. But it does represent an increase from the end of August, when the index came in at 82.5.
The September gain was driven by the expectations component of the index, which was at 75.4 for the end of September, up 4.1 points from the end of August, which points to consumer optimism about the jobs market and about their income, according to the report. On the other hand, the current conditions component dropped 0.9 points from August to 98.9.
The consumer sentiment index is roughly where it has been most of this year, somewhat over 80, which is generally higher than most years since the end of the recession, but not by much. For much of the period between 2010 and 2013, the index was roughly between 70 and 80, though it took a serious but short-lived dip in the summer of 2011 (below 60) when some Congressmen were making noise about allowing the U.S. to default on its sovereign debt.
Wall Street ended a generally dismal week on an upbeat note, with the Dow Jones Industrial Average up 167.35 points, or 0.99 percent. The S&P 500 gained 0.86 percent and the Nasdaq advanced 1.02 percent.