The Bureau of Economic Analysis (BEA) released the third estimate of real GDP growth for the second quarter of 2013. Real GDP grew at a seasonally adjusted annual rate of 2.5%, unchanged from the second estimate last month. Downward revisions to inventory investment and exports were offset by upward revisions to state and local government spending. Real GDP growth in the first quarter was 1.1%.
Third quarter (July-September) economic activity has largely taken place and will be reported (the advance estimate) in late October. The real wildcard for economic growth going forward will be how the upcoming fiscal year budget and debt ceiling battles are resolved. The impact of any October showdown(s) will be reflected in the fourth quarter data released for the first time in late January.
With no agreement and high (or low) drama on Capitol Hill at this late date, an elegant long-term solution seems unlikely. However, we expect cooler heads to prevail and an economy-crushing meltdown to be avoided. Keep your fingers crossed.