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US Treasury par yield curve · Jul 29 · Source: U.S. Treasury
Thursday, July 30, 2026
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National accounts

Real GDP slowed to 1.5 percent, and the release says the drop in federal nondefense spending that led the government decline mainly reflects oil sold out of the Strategic Petroleum Reserve

Money & World
The Editorial Team ·
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Page 5 is where the interesting sentence is.

The advance estimate of second quarter gross domestic product, released by the Bureau of Economic Analysis at 8:30 on Thursday morning, puts real growth at an annual rate of 1.5 percent. The first quarter figure was 2.1 percent. The headline account of that deceleration names a downturn in government spending, and the Technical Notes explain what the government line is doing.

Federal nondefense consumption expenditures led the decrease. The pattern of that spending, BEA writes, "primarily reflected sales of crude oil from the Strategic Petroleum Reserve, based on data from the Department of Energy". In the national accounts, sales are deducted from government consumption expenditures, so selling more oil registers as spending less. The release then says the thing worth quoting in full: "Because the oil sold by the government is reflected as an increase in other components of GDP, there is no direct effect on GDP."

The chain runs three deep and every link is the word primarily: federal led the government decrease, nondefense led federal, and oil sales led nondefense. Read literally, a large part of the drag on the government component is a transfer between lines rather than a withdrawal of demand.

Private demand went the other way

Real final sales to private domestic purchasers, which is consumer spending plus gross private fixed investment and is the cleanest read on underlying demand in the release, increased 3.9 percent. In the first quarter it increased 1.7 percent. That is more than a doubling of the pace, in the quarter the headline calls a slowdown.

Consumer spending accelerated. Within goods, BEA leads with other nondurable goods, mainly prescription drugs, then motor vehicles and parts, led by new light trucks, then furnishings and household equipment, led by furniture. Within services the leading contributors were food services and accommodations, and financial services and insurance, led by portfolio management.

Investment rose on equipment and intellectual property products, and fell on private inventories and nonresidential structures. The equipment increase was widespread. The structures decrease was led by manufacturing structures.

Trade, in both directions, in the same commodity story

Exports rose on goods, led by petroleum and related products. Services exports fell, led by travel and by other business services. Imports rose, primarily goods, led by capital goods excluding automotive, and inside that BEA names telecommunications equipment, semiconductors and related devices, and industrial equipment.

Imports are a subtraction in the calculation of GDP, and they increased more in the second quarter than in the first.

The price numbers are the uncomfortable ones

The gross domestic purchases price index increased at an annual rate of 5.7 percent, against 3.6 percent in the first quarter. The PCE price index increased 5.1 percent, against 4.6 percent.

Excluding food and energy, the PCE price index increased 3.4 percent, against 4.4 percent. Core decelerated by a full percentage point while the headline accelerated. Everything in that gap is food and energy.

Current-dollar GDP increased 7.9 percent, which is the 1.5 percent of real growth plus the price change. The second estimate, with corporate profits, is due on 26 August.

The document: U.S. Bureau of Economic Analysis, 'GDP (Advance Estimate), 2nd Quarter 2026', release BEA 26-35, embargoed until 8:30 a.m. EDT Thursday, July 30, 2026, six pages, PDF retrieved and text extracted by this desk at 08:34 Eastern on 30 July 2026. Technical contact Lisa Mataloni (GDP), media contact Connie O'Connell. Page 1, verbatim: 'Real gross domestic product (GDP) increased at an annual rate of 1.5 percent in the second quarter of 2026 (April, May, and June), according to the advance estimate released today by the U.S. Bureau of Economic Analysis (BEA). In the first quarter, real GDP increased 2.1 percent.' And: 'The contributors to the increase in real GDP in the second quarter were increases in consumer spending, investment, and exports that were partly offset by a decrease in government spending. Imports, which are a subtraction in the calculation of GDP, increased.' Page 2: 'Compared to the first quarter, the deceleration in real GDP in the second quarter reflected a downturn in government spending and decelerations in investment and exports that were partly offset by an acceleration in consumer spending. Imports increased more in the second quarter than in the first quarter.' And: 'Real final sales to private domestic purchasers, the sum of consumer spending and gross private fixed investment, increased 3.9 percent in the second quarter, compared with an increase of 1.7 percent in the first quarter.' And: 'The price index for gross domestic purchases increased 5.7 percent in the second quarter, compared with an increase of 3.6 percent in the first quarter. The personal consumption expenditures (PCE) price index increased 5.1 percent, compared with an increase of 4.6 percent, and the PCE price index excluding food and energy increased 3.4 percent, compared with an increase of 4.4 percent.' Table 'Real GDP and Related Measures', percent change SAAR from 2026:Q1 to 2026:Q2, advance estimate: real GDP 1.5; current-dollar GDP 7.9; real final sales to private domestic purchasers 3.9; gross domestic purchases price index 5.7; PCE price index 5.1; PCE price index excluding food and energy 3.4. Page 3: 'Next release: August 26, 2026, at 8:30 a.m. EDT, GDP (Second Estimate) and Corporate Profits, 2nd Quarter 2026'; 2026 annual updates of national, industry and regional data all begin 30 September 2026. Page 4, Technical Notes: real GDP increased at an annual rate of 1.5 percent, '0.4 percent at a quarterly rate'; consumer spending increases in both goods and services, goods led by other nondurable goods (mainly prescription drugs), motor vehicles and parts (led by new light trucks) and furnishings and durable household equipment (led by furniture), services led by food services and accommodations and by financial services and insurance (led by portfolio management); investment increase primarily equipment and intellectual property products, partly offset by decreases in private inventory investment and nonresidential structures, with wholesale trade the largest contributor to the inventory decrease. Page 5, verbatim: 'Within government spending, the decrease was led by federal government spending, primarily reflecting nondefense consumption expenditures. The pattern of nondefense spending primarily reflected sales of crude oil from the Strategic Petroleum Reserve, based on data from the Department of Energy. Within the National Economic Accounts, sales are deducted from government consumption expenditures; therefore, an increase in sales results in a corresponding decrease in consumption expenditures. Because the oil sold by the government is reflected as an increase in other components of GDP, there is no direct effect on GDP.' Also page 5: within exports the increase reflected goods led by petroleum and related products, partly offset by a decrease in services led by travel and other business services; within imports the increase primarily reflected goods led by capital goods except automotive, mainly telecommunications equipment, semiconductors and related devices, and industrial equipment; the decrease in nonresidential structures was led by manufacturing structures. Release read in full..

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