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, US Economist, Insights and Analysis, S&P Global Market Intelligence and

Kathleen Navin, Economics Executive Director, US Macroeconomics, S&P Global Market Intelligence