US Q2 GDP Revised Sharply Downwards To 2.1% (We Got Trouble In Potomac City!)

Bidenomics has a new themesong! We got trouble in Potomac City (aka, Washington DC). US Q2 GDP was revised sharply downwards to 2.1% QoQ. Much lower than the expected 2.4% QoQ.

Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the second quarter of 2023, according to the “second” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 2.0 percent.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.4 percent (refer to “Updates to GDP”). The updated estimates primarily reflected downward revisions to private inventory investment and nonresidential fixed investment that were partly offset by an upward revision to state and local government spending.

The increase in real GDP reflected increases in consumer spending, nonresidential fixed investment, state and local government spending, and federal government spending that were partly offset by decreases in exports, residential fixed investment, and private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased.

The revision according to the BEA, “reflected a smaller decrease in inventory investment and an acceleration in business investment. These movements were partly offset by a downturn in exports and decelerations in consumer spending and federal government spending. Imports turned down.”  In short, everything was uglier,

Taking a closer look at the data, we find the following changes to the bottom line:

• Personal consumption added 1.14% to the bottom line print or just over half, up from 1.12% in the original print; annualized this comes out to 1.7% which was below the 1.8% estimate.
• Fixed investment contributed 0.66%, down from 0.83%
• Change in private inventories now subtracting 0.09% from the bottom line number, a big swing from the positive 0.14% print in the original estimate. And it will be revised even lower next month as more of the “shrink” emerges.
• Net exports were  also revised lower, with gross exports trimmed from -1.28% to -1.26%, while imports were revised from 1.16% to 1.04%
• Finally the ever handy plug that is government consumption (which is a garbage concept since the government does not actually create anything of economic value in the economy but merely allocated graft and embezzlement of public funding), actually rose from 0.45% to 0.58% (of bottom line GDP). Without this revision, Q2 GDP would have printed below 2.0%

Separately, gross domestic purchases prices, the prices of goods and services purchased by U.S. residents, increased
1.7% in the second quarter after increasing 3.8 percent in the first quarter, above the 1.6% estimate last month but below the consensus 1.8%. Excluding food and energy, prices increased 2.4% after increasing 4.2%.

Personal consumption expenditure (PCE) prices increased 2.5% in the second quarter after increasing 4.1% in the first quarter. Excluding food and energy, the PCE “core” price index increased 3.7% after increasing 4.9%. This number was also revised lower from 3.8% and missed estimates of 3.8%.

Finally, the BEA reported corporate profits decreased 0.4% at a quarterly rate in the second quarter after decreasing 4.1% in the first quarter. Profits of domestic financial corporations decreased 12.1% after decreasing 2.3 percent. Profits of domestic nonfinancial corporations increased 0.9% after decreasing 5.0 percent. Profits from the rest of the world (net)increased 4.4 percent after decreasing 2.0 percent. Corporate profits decreased 6.5 percent in the second quarter from one year ago.

Needless to say, all this is a far cry from the rebound in corporate profits that companies themselves reported in their various GAAP and non-GAAP metrics, which is to be expected in a world where there is now an uncrossable chasm between economic data and its government fabrications.

Then we have M2 Money collapsing, down -3.7% in July. Longest, deepest contraction of money suppy since 1933.

Biden, making Zelenskyy rich again!! The US bought Zelenskyy a new villa! “The document indicates that the villa was purchased by Zelenskyy’s mother-in-law in May 2023. The price of the villa is 150,000,000 Egyptian pounds or approximately $4,850,000.” Thanks Biden!!! America last!