WASHINGTON – The nation’s real gross domestic product, adjusted for inflation, increased at an annual rate of 4.0 percent in the second quarter, according to the preliminary estimate released today by the U.S. Department of Commerce’s Bureau of Economic Analysis, after edging up at a revised pace of 0.6 percent in the first quarter.
Increases in exports and government spending helped boost the U.S. economy to its strongest showing in more than a year. But the GDP’s growth still lagged the 4.1-percent median forecast from a survey of 81 economists by Bloomberg News; the analysts’ predictions ranged from 3.2 percent to 4.5 percent.
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The preliminary GDP – the total goods and services produced by labor and property in the United States – is based on more complete data than was available for the second-quarter “advance” report issued last month.
The BEA credited the GDP’s growth largely to a 3.2-percent decrease in imports, a 7.6-percent rise in exports and a 28-percent increase in commercial construction, along with increases in personal spending; commercial; federal, state and local government spending; and equipment and software.
Partially offsetting those improvements was a decline in real residential fixed investment (mostly, housing construction). It fell at an annual rate of 11.6 percent in the second quarter, slowing from its recent declines of 16.3 percent in the first quarter, 19.8 percent in the fourth quarter of 2006 and 18.7 percent in the third.
Real personal consumption expenditures (PCE) – which constitute about 70 percent of the economy – increased 1.4 percent after rising 3.7 percent in the first quarter, 4.2 percent in the fourth and 2.8 percent in the third. The gain, though revised upward from the BEA’s initial estimate of 1.3 percent, was the smallest in the past year.
The “core” PCE (excluding food and energy expenditures) rose at an annual rate of 1.3 percent – the smallest gain in four years – after rising 2.4 percent in the first quarter.
The price index for gross domestic purchases, a measure of prices paid by U.S. residents, increased at a rate of 3.8 percent in the second quarter, slightly less than the 3.9 percent initially estimated. Excluding food and energy, prices increased at an annual rate of 1.6 percent, about half the first-quarter’s 3.1-percent rise.
As the repercussions of the subprime mortgage slump have spurred lenders to tighten credit, risks to the broader economy have “increased appreciably,” Federal Reserve Board policymakers said this month. The housing slump is “likely to persist,” Neal Soss, chief economist at Credit Suisse in New York, told Bloomberg News, adding: “It’s setting us up for slightly slower growth in the second half.”
Additional information, including the full GDP report report, is available from the U.S. Department of Commerce’s Bureau of Economic Analysis at www.bea.gov.
