SMF Traders Report ECONX Q2 GDP Revision Defies Recession Talk

Second quarter real GDP growth was revised up to 3.3% from a previously reported 1.9%. As expected, net exports played a key part in the upward revision, but an inventory adjustment also helped, too, as the change in inventories was narrowed to -$49.4 billion from -$62.2 billion.

Personal consumption was also revised up to 1.7% from 1.5% Real final sales, which exclude inventories and are a better indicator of underlying demand, were revised up to 4.8% from 3.9%. The deflator was revised up to 1.2% (from 1.1%) while core PCE remained unchanged at 2.1%.

The revised GDP number shows the economy was a long way from recession in the second quarter. Heck, the 3.3% rate of growth is even above the long-term trend. Clearly, the fiscal stimulus package has helped in this period while the weaker dollar has been a clear boon for exports.

This report should be taken as nothing but encouraging news in the face of many gloomy -- and incorrect -- headlines discussing the state of the U.S. economy. What's more is that the trends in the data suggest a similar-sized increase for Q3.

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