US based CFOs have cause to cheer with the US economy growing at a faster clip than expected. The Bureau of Economic Analysis on Wednesday revised the US real gross domestic product (GDP) growth rate for the second quarter of 2017 to 3% from 2.6% estimated earlier. This is the fastest the US economy has grown over the last two years. Economists had earlier forecast only a slight increase to 2.7% from 2.6%. The revised 3% GDP growth rate is also in line with President Trump’s long term economic growth rate target. The US economy grew by only 1.2% in the first quarter of 2017.
The increase in real GDP in the second quarter reflected positive contributions from Personal Consumption income, nonresidential fixed investment, exports, federal government spending, and private inventory investment. This increase was partly offset by negative contributions from residential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP.
The current-dollar GDP increased 4% or $189.0 billion to hit a level of $19,246.7 billion.
Corporate Profits
Corporate profits from current production (corporate profits with inventory valuation adjustment and capital consumption adjustment) increased $26.8 billion in the second quarter of the year compared to a decrease of $46.2 billion in the first quarter.
The profit increase was led by domestic nonfinancial corporations that saw an increase of $64.8 billion compared with an increase of $3.8 billion last quater. As for profits for domestic financial corporations, they decreased by $29.4 billion in the second quarter, compared to a decrease of $40.7 billion in the first quarter.
The rest-of-the-world component of profits decreased $8.6 billion in the second quarter compared with a decrease of $9.3 billion in the previous one. This measure is calculated as the difference between receipts from the rest of the world and payments to the rest of the world. In the second quarter, receipts increased $8.5 billion, and payments increased $17.1 billion.
