GDP Revised Up to 2.2% vs 1.5% Est — Price Index 6.1%, Hottest Since 2022

Fundamentals · 2026-09-30

Real GDP +2.2% annualized in Q2 (vs 1.5% est), revised up 0.7pp from the second estimate; Q1 revised to 2.5% from 2.1%; GDP price index +6.1% (vs 6.4% est), revised down from 6.4% but the highest since Q2 2022; Q1 price index revised to 3.2% from 3.6%; nominal GDP +8.5%; real consumer spending +3.8% (vs 3.4% est); final sales to private domestic purchasers +4.6%, the strongest since Q1 2023; equipment +13.4%, intellectual property +9.2%; inventories -0.53pp, net exports -1.10pp; government -0.1% from -1.0%; real GDI +2.6%, GDP-GDI average +2.4%; corporate profits +$384.0B, revised down $16.9B; core PCE prices 3.3% annualized, revised down 0.3pp; results include the 2026 annual update back to Q1 2021.

What It Changes

• Growth was stronger than we thought, in both quarters. Q2 was revised to 2.2% from 1.5%, and Q1 to 2.5% from 2.1%. The first half of 2026 grew at about 2.3% annualized, not the 1.8% the second estimate implied.
• The economy-wide price index eased but stayed hot. At 6.1%, the GDP price index came in 0.3pp below consensus. It is still the fastest quarterly rise since Q2 2022, and nominal GDP grew 8.5%.
• The underlying demand story got stronger. Final sales to private domestic purchasers, consumer spending plus fixed investment, rose 4.6%, and the GDP-GDI average rose 2.4%. There is no weak-growth case in the first half for a Fed that hiked on 16 September.
• But this is the quarter that ended in June. This morning's August PCE data shows core running at 2.0% annualized over the past three months. The Q2 heat is in the rear-view mirror, and the market traded the monthly data, not this.

Impact

• USD — Slight bullish — firmer growth and a 6.1% price index support the hawks' case on paper, but the market read the August PCE data released in the same minute as dovish.
• This release shared 08:30 with August personal income and outlays, the advance goods trade balance and wholesale inventories, so no market move can be attributed to it alone.
• DXY fell from 101.201 at 08:29 to 101.026 by 08:32 and was back at 101.22 by 10:00 (TradingView 1-minute bars). The 2-year fell about 4bp and held it. The 10-year dipped, then finished the first hour above where it started.
• A 4.6% private demand rate and 2.4% GDP-GDI average remove the argument that policy is choking growth.
• US Indices (ES / NQ / YM / RTY) — Slight bullish — stronger growth and profits up $384.0 billion support earnings, with the rate risk coming from the monthly inflation data rather than this.
• NQ carries the investment read: equipment rose 13.4% and intellectual property products 9.2%, and BEA said the structures revision was led by data centres.
• Profits were revised down $16.9 billion but still rose 8.9% on the quarter and 20.8% on the year.
• Gold (GC) — Mixed — hot backward-looking prices argue for tighter policy, and gold has been trading on yields; the reaction at 08:30 belonged to the monthly data.

Inside The Number

Real GDP grew at a 2.2% annualized rate in the second quarter, against a 1.5% consensus (Trading Economics) and the 1.5% of both earlier estimates. The upward revision was 0.7 percentage point. BEA said it came mainly from investment, consumer spending and government spending. This release also carries the 2026 annual update of the national accounts, covering Q1 2021 to Q1 2026, and Q1 was revised to 2.5% from 2.1%.

The price side went the other way. The GDP price index rose 6.1%, below the 6.4% consensus and the 6.4% second estimate. Q1 was revised down to 3.2% from 3.6%. Nominal GDP grew 8.5%, the fastest since Q2 2022. The PCE price index for Q2 was revised to 5.0% from 5.3%, and core PCE to 3.3% from 3.6%. So the annual update did two things at once: it raised real growth and lowered inflation. That is a better economy than the one published a month ago.

Consumer spending was the largest contributor. Real consumer spending grew 3.8%, revised up from 3.4%, and added 2.51 percentage points to growth. Durable goods rose 7.4%, revised up from 5.7%, and services 3.4% from 3.1%. BEA traced the services revision to recreation services (mainly admissions to spectator events) and other services (social services and religious activities), from the Census Quarterly Services Survey, partly offset by lower air transportation. The goods revision was led by recreational goods and vehicles, mainly information processing equipment, on revised retail data and a new deflator.

Investment was the second driver. Fixed investment rose 7.7%, revised up from 7.0%. Equipment rose 13.4% and intellectual property products 9.2%, together adding 1.25 percentage points. Structures swung to +0.1% from -1.8%, with BEA pointing to commercial and health care construction, "mainly data centers". Residential rose 2.8% from 1.3%, led by improvements. Inventories still subtracted 0.53 points, but less than the 0.72 first reported.

The drags were trade and government. Net exports took 1.10 points off growth. Imports rose 12.6%, with goods imports up 15.3%, while exports rose 5.0%. Government spending fell only 0.1%, revised up from -1.0%. Federal defence rose 5.3%, revised up from 2.4% on new seasonal factors, and federal nondefence fell 12.7%.

The income side agrees. Real gross domestic income rose 2.6%, revised up from 2.2%, and the average of GDP and GDI rose 2.4%, from 1.8%. Corporate profits from current production rose $384.0 billion, revised down from $400.9 billion, an 8.9% quarterly gain. On the year, profits are up 20.8%.

The Internals

% change at annual rates, Q2 2026, second estimate against third:

Measure · Third estimate · Second estimate · Revision · Q1 2026 (revised)

Real GDP · 2.2% · 1.5% · +0.7pp · 2.5%

Consumer spending · 3.8% · 3.4% · +0.4pp · 0.7%

Goods · 4.5% · 4.3% · +0.2pp · 0.8%

Durable goods · 7.4% · 5.7% · +1.7pp · 1.7%

Nondurable goods · 3.1% · 3.5% · -0.4pp · 0.3%

Services · 3.4% · 3.1% · +0.3pp · 0.7%

Fixed investment · 7.7% · 7.0% · +0.7pp · 6.1%

Nonresidential · 9.0% · 8.5% · +0.5pp · 9.9%

Structures · 0.1% · -1.8% · +1.9pp · -9.4%

Equipment · 13.4% · 13.6% · -0.2pp · 15.5%

Intellectual property products · 9.2% · 8.8% · +0.4pp · 15.6%

Residential · 2.8% · 1.3% · +1.5pp · -7.6%

Exports · 5.0% · 4.5% · +0.5pp · 13.9%

Imports · 12.6% · 12.5% · +0.1pp · 11.5%

Government · -0.1% · -1.0% · +0.9pp · 4.7%

Federal defence · 5.3% · 2.4% · +2.9pp · 4.5%

Federal nondefence · -12.7% · -13.2% · +0.5pp · 20.7%

State and local · 1.2% · 0.9% · +0.3pp · 1.4%

Final sales to private domestic purchasers · 4.6% · 4.2% · +0.4pp · 1.8%

Real GDI · 2.6% · 2.2% · +0.4pp · 2.5%

Average of GDP and GDI · 2.4% · 1.8% · +0.6pp · 2.5%

Nominal GDP · 8.5% · 8.0% · +0.5pp · 5.8%

Prices, % change at annual rates:

Measure · Third estimate · Second estimate · Revision · Q1 2026 (revised)

GDP price index · 6.1% · 6.4% · -0.3pp · 3.2%

GDP prices ex food and energy · 4.2% · 4.4% · -0.2pp · 2.7%

Gross domestic purchases prices · 5.6% · 5.8% · -0.2pp · 3.2%

PCE prices · 5.0% · 5.3% · -0.3pp · 4.2%

Core PCE prices · 3.3% · 3.6% · -0.3pp · 3.9%

Market-based core PCE · 3.2% · 3.4% · -0.2pp · 3.9%

Contributions to real GDP growth, percentage points:

Component · Third estimate · Second estimate · Revision

Consumer spending · 2.51 · 2.31 · +0.20

Goods · 0.94 · 0.89 · +0.05

Services · 1.57 · 1.42 · +0.15

Fixed investment · 1.35 · 1.20 · +0.15

Equipment · 0.74 · 0.72 · +0.02

Intellectual property products · 0.51 · 0.48 · +0.03

Structures · 0.00 · -0.05 · +0.05

Residential · 0.10 · 0.05 · +0.05

Change in private inventories · -0.53 · -0.72 · +0.19

Net exports · -1.10 · -1.14 · +0.04

Government · -0.01 · -0.16 · +0.15

Corporate profits from current production:

Measure · Q2 2026 · Second estimate · Read

Change from Q1 · +$384.0B · +$400.9B · Revised down $16.9B

Quarterly % change · 8.9% · n/a · Largest since Q2 2021

Change from a year ago · 20.8% · n/a · Q1 was 11.3%

Profits after tax, change from Q1 · +$276.9B · +$297.7B · Revised down $20.8B

Q1 change from Q4 · +$63.4B · +$74.4B · Revised down $11.0B

Where The Revisions Came From

BEA names the source data behind each revision, which tells you how durable each one is:

Revision · Direction · Source

Private inventories · Up, led by wholesale trade, other industries, and mining, utilities and construction · New and revised Census inventory data, plus USDA farm data

Nonresidential structures · Up, led by commercial and health care, mainly data centres · Revised Census construction spending data for May and June

Residential investment · Up, led by improvements · Revised June remodelers' payroll data

Consumer services · Up, led by recreation and other services · Census Quarterly Services Survey

Air transportation · Down · Bureau of Transportation Statistics

Consumer goods · Up, led by information processing equipment · Revised Census retail data and an updated deflator

Federal defence · Up, intermediate goods and services · Updated BEA seasonal factors

The defence revision is technical, from seasonal factors rather than new spending data. The data-centre revision is the one with information in it: it confirms the AI build-out is showing up in structures as well as equipment.

By industry, private services-producing industries grew 2.5%, private goods-producing 2.3%, and government less than 0.1%. The leading contributors were real estate and rental and leasing, information, durable goods manufacturing, and finance and insurance. The leading offsets were transportation and warehousing, retail trade, and nondurable goods manufacturing. By state, real GDP rose in 44 states and the District of Columbia, from 4.0% in New York, led by finance and insurance, to -2.3% in West Virginia, led by mining.

Against This Morning's Open

• The Open carried the third estimate at 1.5% against a 1.5% prior, and noted that the 2.1% some calendars showed was Q1. It printed 2.2%, and Q1 is now 2.5%.
• The Open named core PCE, not GDP, as the day's fulcrum. That held: the market traded the August monthly data, and the backward-looking Q2 revisions did not change the direction of the 08:30 move.

What This Sets Up

• Next GDP release — Thursday, 29 October 2026, 08:30 ET: the advance estimate for Q3, on the same morning as September personal income and outlays.
• The test is whether Q3 holds anything near the first half's pace. July's revised real spending rose 0.1% and August's rose 0.6%, so consumer spending enters September on a firm footing.
• On prices, the GDP price index needs to fall well below 6.1% for the Q3 read to match the monthly core PCE slowdown. A second quarter near 6% would say economy-wide prices are running far hotter than the consumer measure the Fed targets.
• Watch the gap between equipment and structures. Data-centre construction has now appeared in the revisions; if it drives a positive structures print in Q3, the AI build-out is broadening beyond equipment.

What Is This?

• What it is: The Bureau of Economic Analysis's third estimate of second-quarter GDP (release BEA 26-42), with GDP by industry, corporate profits, state GDP and state personal income. It is the last of three quarterly estimates, each drawing on more complete source data. This year it also carries the annual update of the national accounts, which revised the series from Q1 2021 to Q1 2026.
• Why it matters: It is the broadest measure of output and of economy-wide prices, and it arrives with the Fed having hiked to 3.75%-4.00% on 16 September. A stronger quarter removes the argument that tighter policy is hurting growth; the GDP price index shows whether inflation outside the consumer basket is still running hot.
• How to read it: Growth and price rates are quarterly changes expressed at annual rates, so a 2.2% print means the economy grew about 0.6% in the quarter. They are not comparable to year-over-year figures without conversion. The GDP price index covers everything produced domestically, including investment and government, and excludes imports, so it can run far from PCE inflation. Final sales to private domestic purchasers strips out government, trade and inventories and is the cleaner read on underlying demand. By the third estimate, the release is backward-looking; markets usually react more to the monthly data released alongside it.

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_For informational purposes only. Not investment advice._