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US GDP Expanded by 3.7% in 2Q15

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US GDP Expanded by 3.7% in 2Q15 PART 1 OF 2

Second Estimate: US 2Q15 Gross Domestic Product Expands by 3.7%

SPY gained 2.47% on the US economic growth report

The benchmark-tracking SPDR S&P 500 ETF Trust (SPY) gained 2.47% on August 27, as the US Bureau of Economic Analysis came out with its second estimate for the 2Q15 GDP (gross domestic product). Wall Street gains on August 27 were led by Freeport-McMoRan (FCX), Signet Jewelers (SIG), and CONSOL Energy (CNX). FCX was up 28.66%, SIG gained 14.45%, and CNX advanced 13.79%.

Among the nine sectors tracked by the S&P 500 Index, the energy sector (XLE) advanced the most, registering a 4.95% gain, followed by materials (XLB), which gained 3.63%. The second estimate shows that the GDP expanded by 3.7% in the second quarter of this year. In 1Q15, real GDP in the US increased by 0.6%.

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GDP numbers are important to all economic participants

GDP represents the total value of the country’s production during the period and consists of the purchases of domestically produced goods and services by individuals, businesses, foreigners, and government entities. To investors and other economic participants in an economy—an assessment of the real GDP—which is adjusted for inflation, helps determine whether the value of output has gone up because more is being produced or simply because prices have increased.

To learn more about the importance of GDP numbers for investors, please read Why GDP is a country’s most comprehensive economic scorecard.

2Q15 GDP exceeded expectations

The second estimate of the 2Q15 GDP figure of 3.7% came in well above Wall Street expectations of 3.2%. GDP growth usually picks up in the second quarter, as first quarter headwinds such as severe winter weather tend to lessen with the onset of spring. The figure, however, fell short of last year’s second quarter growth figure when the US economy expanded by 4.6%.

The Bureau of Economic Analysis will be releasing a final estimate of GDP for the second quarter of 2015 on September 25. Meanwhile, the bureau released GDP price index figures as well as its report on corporate profits in the US (IVV), which we’ll discuss next.

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