Revised US Q2 data weaken recession theory

The second estimate of Q2 GDP showed the US economy contracted at a slower-than-expected rate of 0.6%. Upward revisions to underlying demand and a first read from the income side weakens the argument that the economy is currently in recession.

The US economy contracted at a 0.6% annualized rate in the second quarter according to the second estimate of GDP, which is slightly better than previously thought. While Q2 still marks the second-consecutive decline in real GDP growth, the upward revisions weaken the current recession argument.

Despite some upward revisions, second quarter weakness still reflects a genuine slowing in economic activity. Real final sales to domestic purchasers, an indication of underlying demand, still came in negative, contracting at a 0.2% annualized pace during the quarter.