Second Quarter GDP Growth Gets Major Revision Up to 3.8%

Economic growth in the second quarter of the year has been revised upward to a massive 3.8% thanks to stronger consumer spending, rising incomes, and lower imports.

That’s higher than the 3.3% reported in the second estimate and the initial 3% estimate.

According to the Washington Free Beacon:

The report is the third and final estimate for last quarter’s GDP. The headline number can change during such revisions. The data show that the economy bounced back after a contraction in the first quarter.

The growth in GDP in the second quarter, adjusted for inflation and seasonal variations, was stronger than most economists had expected earlier this year and allays fears about a recession. It also gives President Donald Trump more leeway to pursue his agenda.

With this revision, the U.S. economy is growing at its fastest pace in roughly two years.

Downward revisions were the norm when it came to the economic statistics of the Biden administration. 

Earlier this month the Bureau of Labor Statistics announced that job growth in the U.S. was likely much weaker than initially reported from early 2024 through March of this year. According to the BLS, the economy added 911,000 fewer jobs over the 12-month period ending in March, slashing more than half of the previously reported 1.79 million jobs. If confirmed, this adjustment would reduce the average monthly seasonally adjusted job gains from 147,000 to roughly 70,000 during that time.

In absolute terms, this report represents the largest preliminary revision since records began in 2000, and as a percentage of total jobs affected, it's the biggest since 2009, following the global financial crisis. It builds on last year's revision, which eliminated nearly 600,000 jobs from the count for the prior 12 months ending in March 2024. For the second consecutive year, the government's flagship jobs data series has overstated the true state of employment.

Prior revisions told the same story. In fiscal year 2023, the government revised employment growth down by 443,000 jobs, which was over 40% of payroll growth. July is the only month in the 2023 fiscal year where the revised numbers estimated more jobs created than initially reported. That didn’t happen until a second revision, with the initial revision estimating 30,000 fewer jobs created than first reported.

And back in 2022, the Philadelphia Federal Reserve estimated that the BLS overstated job creation by over 1 million between March and June of that year.