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Monthly GDP rose 1.9% in July following materially larger
increases in May (4.6%) and June (5.7%). Nearly two-thirds of the
increase in July was accounted for by nonfarm inventories; a slight
accumulation in July followed a sharp paring in June. Other
contributors included personal consumption expenditures and
nonresidential fixed investment. The level of GDP in July was 32.6%
above the second-quarter average at an annual rate. Implicit in our
latest tracking forecast of 28.7% annualized GDP growth in the
third quarter are moderate declines in monthly GDP in August and
September. High-frequency indicators consistent with declining
activity include small-business revenues (Opportunity Insight),
which have been trending lower since early July and the Weekly
Economic Index (New York Fed), which, as of last week, suggests
less third-quarter growth than we forecast.
Our index
of Monthly GDP (MGDP) is a monthly indicator of real aggregate
output that is conceptually consistent with real Gross Domestic
Product (GDP) in the National Income and Product Accounts. The
Monthly GDP Index is consistent with the NIPAs for two reasons:
first, MGDP is calculated using much of the same underlying monthly
source data that is used in the calculation of GDP. Second, the
method of aggregation to arrive at MGDP is similar to that for
official GDP. Growth of MGDP at the monthly frequency is determined
primarily by movements in the underlying monthly source data, and
growth of MGDP at the quarterly frequency is nearly identical to
growth of real GDP.
Posted 01 September 2020 by Ben Herzon, Ph.D., Executive Director and
