The first estimate of U.S. GDP for the second quarter was released and, for the second consecutive quarter, it showed a decline. The 0.9% decline was driven in part by a decrease in inventories which subtracted two percentage points from the total. Consumer spending, which accounts for almost 70% of GDP was only modestly higher for the period rising just 1.0%.
In addition to the second quarter GDP report the week saw ISM survey data for the month of July released. The results for both the manufacturing and services sectors currently indicate the economy continues to grow as both exceeded the 50.0 threshold that indicates growth or contraction. Not only did both data points exceed the 50.0 level they were also higher than consensus expectations.
The U.S. consumer, as measured by the University of Michigan’s Consumer Sentiment Index, continues to be somewhat subdued as this week saw the index register a level that was just marginally higher than its all-time low which occurred the prior month.
A subindex which evaluates how consumers view prospects for their own financial situation, the general economy over the near term, and the economy over the long term continued to weaken, hitting its lowest level since May of 1980.