Second quarter GDP figure is at the head of the class

The advance estimate for second quarter GDP at 4.0 percent could serve as a sign of a steadier and improving economy.

By ·

In most schools, the figure 4.0 represents perfection, or, the “Gold Standard,” if you will, with straight A’s across the board (I cannot speak to this based on my own academic experience, but that is my understanding anyhow).

Yesterday, the United States Bureau of Economic Analysis (BEA), which is housed in the Department of Commerce, released its advance estimate for second quarter GDP, and guess what it came in at? By now, you probably know, it is 4.0 percent, which is a very good number in any type of economic environment, but especially in the current one, which has seen many signs of hope and an equal amount of head fakes over the last six years or so. Interesting economic times does not even begin to cover it, it seems.

What’s more, the 4.0 GDP mark easily trumps the first quarter’s -2.1 percent tally, which was revised from -2.9.

As for what drove the 4.0 percent second quarter GDP, one obvious factor was a goodbye to winter, which wreaked havoc on the economy, and, subsequently, supply chain operations, in the form of missed deliveries, longer transit times, and clogged networks, among other factors.

The Commerce Department’s BEA cited other factors, too, including positive contributions from personal consumption expenditures, private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment, while imports dipped.

Of keen interest to supply chain stakeholders in this batch of data is that the change in private inventories accounted for 1.66 percent, or more than 25 percent, to the total second quarter GDP advance estimate. This data point is particularly impressive in the sense that in the deflating first quarter private inventories contracted 1.16 percent. The BEA noted that private business investment in inventories in the second quarter hit $93.4 billion for the quarter, with the first quarter at a little less than one-third of that figure at $35.2 billion.

Of all the things to be pleased about in this report, it stands to reason that the rebound in inventories may be the valedictorian en route to the 4.0 percent GDP level. Why? For one thing, it speaks to healthier freight volumes, more fluid freight networks, and an improving consumer outlook, too.

It is worth noting that the last point is approaching levels that have not been seen in more than a long time. We all know one month does not make a trend (except for Major League Baseball teams fighting for playoff position), but it is worth bringing up consumer confidence data issued this week by the Conference Board.

The Conference Board reported that consumer confidence for the month of July checked in at 90.9, topping June’s 86.4, and standing as its highest reading going back to October 2007.
Lynn Franco, Director of Economic Indicators at The Conference Board, said in a statement that “Consumer confidence increased for the third consecutive month and is now at its highest level since October 2007 (95.2). Strong job growth helped boost consumers’ assessment of current conditions, while brighter short-term outlooks for the economy and jobs, and to a lesser extent personal income, drove the gain in expectations. Recent improvements in consumer confidence, in particular expectations, suggest the recent strengthening in growth is likely to continue into the second half of this year.”

With the year more than half over, economic conditions appear to be in better shape at this point of the year than they have in more than half a decade. It remains to be seen how things will play out, but at least, for now anyhow, the economy is closer to the head of the class than in summer school.


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

GDP · Supply Chain Management · All Topics
Latest Whitepaper
The View from the New “Single Window”
The single window, officially known as the "International Trade Data System," operates via the Customs and Border Protection (CBP) agency's Automated Commercial Environment (ACE) platform, and serves as a single point of contact for all trade filings.
Download Today!
From the March 2017 Issue
WMS vendors are stepping up to the plate and developing functionalities and solutions that meet the complex needs of today’s companies. Our top analysts take a peek into these developments and discuss the DC of the future and the software that will support it.
5 Supply Chain Trends Happening Now
2017 Warehouse/DC Equipment Survey: Investment up as service pressures rise
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
2017 Trucking Regulations & Infrastructure Update
In this session our panel brings shippers up to date on the state of transportation regulations. Discussion will revolve around regulatory reform, aspects of the federal highway bill and what the transportation landscape looks like in the early days of the Trump administration.
Register Today!
EDITORS' PICKS
LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...
ASEAN Logistics: Building Collectively
While most of the world withdraws inward, Southeast Asia is practicing effective cooperation between...

2017 Rate Outlook: Will the pieces fall into place?
Trade and transport analysts see a turnaround in last year’s negative market outlook, but as...
Logistics Management’s Top Logistics News Stories 2016
From mergers and acquisitions to regulation changes, Logistics Management has compiled the most...