Friday, July 30, 2010

Q2: real annualized GDP growth slows to 2.4%

by Bill McBride on 7/30/2010 08:30:00 AM

From the BEA:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.4 percent in the second quarter of 2010, (that is, from the first quarter to the second quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 3.7 percent.
A few key numbers:

  • "Real personal consumption expenditures increased 1.6 percent in the second quarter, compared with an increase of 1.9 percent in the first."

    PCE is slowing.

  • Investment: Nonresidential structures increased 5.2 percent, in contrast to a decrease of 17.8 percent. Equipment and software increased 21.9 percent, compared with an increase of 20.4 percent. Real residential fixed investment increased 27.9 percent, in contrast to a decrease of 12.3 percent.

    Residential investment was boosted by the tax credit and will decline in Q3.

  • "The change in real private inventories added 1.05 percentage points to the second-quarter changein real GDP after adding 2.64 percentage points to the first-quarter change."

    That is probably the end of the inventory adjustment.

    And here is a summary of the revisions:
    QuarterGDPGDP RevisedChange
    2007-I 1.2%0.9%-0.3%
    2007-II 3.2%3.2%0.0%
    2007-III 3.6%2.3%-1.3%
    2007-IV 2.1%2.9%0.8%
    2008-I -0.7%-0.7%0.0%
    2008-II 1.5%0.6%-0.9%
    2008-III -2.7%-4.0%-1.3%
    2008-IV -5.4%-6.8%-1.4%
    2009-I -6.4%-4.9%1.5%
    2009-II -0.7%-0.7%0.0%
    2009-III 2.2%1.6%-0.6%
    2009-IV 5.6%5.0%-0.6%
    2010-I 2.7%3.7%1.0%
    2010-II 2.4% 

    The recession was worse in 2008 than originally estimated.

    Q1 2010 was revised up, but Q3 and Q4 2009 were revised down. So the recovery is a little weaker than originally estimated.

    I'll have some graphs soon.

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