Caroline H. from Charleston, SC asks: Hi Mitch, I saw that the U.S. GDP number was recently revised higher. It seems like there are a lot of revisions happening these days, so I’m not sure if this is the final-final number or if there will be another change. Regardless, what’s your read on this revision? Good news?
Mitch’s Response:
That’s a keen observation you made about the U.S. GDP headline number. Last week, the Bureau of Economic Analysis released its “second” estimate of Q2 U.S. GDP, which showed the U.S. economy grew faster than initially reported. The annualized growth rate was revised from 3.0% to 3.3%. That’s a pretty meaningful adjustment.1
Market Headlines Keep Changing. Is Your Portfolio Ready?
Economic data and market signals are constantly being revised, sending mixed messages to investors. One week, growth looks stronger than expected, and the next, the outlook shifts again. For many, it can feel like the ground is always moving.
That’s why I’m offering our free guide, Navigating Market Volatility: 4 Principles for Staying the Course3. It shares the habits and mindset that can help keep your portfolio steady, no matter how uncertain the markets become. It also covers topics such as:
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Before I dive into some of the inner workings of the revision, I think it’s important to add a note here about revisions in general. There has been a big splash in the financial media recently because of the revisions to jobs market data from the summer months, which painted a much weaker picture of the U.S. labor market than previously appreciated. The GDP revision may make it seem like a “here we go again” moment for economic data, but the reality is that revisions are very common and are to be expected. As more data comes in, we should expect the numbers to adjust accordingly.
Now, regarding the Q2 U.S. GDP revision, what stood out most to me was the upward revisions to business investment. Nonresidential fixed investment rose 5.7% annualized in the second estimate, compared with just 1.9% in the first. A big piece of that was intellectual property products, particularly research and development. R&D alone swung from showing a contraction in the first estimate (-1.9%) to solid growth of 4.3%. That’s a sharp turnaround, and it suggests businesses may not be nearly as downbeat about the future as some (including myself when I saw the “advance” GDP estimate) assumed.
Consumer spending also came in stronger, especially in healthcare, pharmaceuticals, and food services. And we’re seeing increasingly concrete signs of the AI boom in the data: software investment grew at the fastest quarterly pace since at least 2007. Those figures indicate that both households and businesses are still willing to put money to work, even amid tariff uncertainty and slower job growth.
That said, it’s important not to overstate the strength of the headline. The combined contribution of personal consumption, business investment, and residential real estate, often called “core domestic demand”, was 1.7% annualized, much lower than the headline 3.3%. Trade swings from earlier tariff-related import activity bolstered the top-line GDP number. So, while the economy is proving resilient, growth is not gangbusters as the headline alone might suggest.
From an investor’s perspective, this report is essentially old news to markets, since revisions don’t typically change the overall picture. But it does reinforce an important point: businesses are still investing, households are still spending, and the economy continues to move forward despite tariff worries and softening confidence surveys. Markets seem to be reflecting this resilience.
Revisions may not change the market’s immediate path, but they highlight how quickly the story can shift. For investors, the challenge is knowing how to stay positioned when the numbers move and the headlines follow.
That’s why we’re offering a free guide: Navigating Market Volatility: 4 Principles for Staying the Course. Inside, you’ll find:
- Sharp market declines and corrections are a normal part of investing
- The best market days come unexpectedly (often within days or weeks of the worst days)
- Trying to pick market tops and bottoms is nearly impossible
- Trust your strategy and discipline, not the headlines
- Plus, more insights and assistance to help you keep your investment strategy on course.
If you have $500,000 or more to invest, get your free guide today!
Download Your Free Copy Today: Navigating Market Volatility: 4 Principles for Staying the Course4
Disclosure
2 BEA. 2025.
3 Zacks Investment Management reserves the right to amend the terms or rescind the free Navigating Market Volatility: 4 Principles for Staying the Course offer at any time and for any reason at its discretion.
4 Zacks Investment Management reserves the right to amend the terms or rescind the free Navigating Market Volatility: 4 Principles for Staying the Course offer at any time and for any reason at its discretion.
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