The U.S. economy grew less than previously reported in the second quarter, according to this morning’s Commerce Department report. Gross domestic product was downwardly revised to an annual growth rate of 1% in this morning’s report from a previous estimate of 1.3%, reflecting a smaller increase in inventories and fewer exports.
GDP forecasts for the current quarter are also relatively low, ranging from 0.3% to 1.6%. GDP in the second quarter was $13.26 trillion, still below its height before the recession. The U.S. economy only grew 0.4% in the first quarter of 2011.
Some positive contributions to second-quarter GDP were nonresidential fixed investments, exports, personal consumption expenditures (PCEs), and federal government spending, which was partially offset by negative contributions from state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased during the second quarter.
Real nonresidential fixed investment increase 9.9% during the second quarter, well above the 2.1% in the first. Growth in exports decelerated to a rate of 3.1% from a rate of 7.9% in the first quarter. But imports also decelerated, from an 8.3% rate of growth in the first quarter to 1.9% in the second.
Consumer spending, which accounts for roughly 70% of the economy, grew at a 0.4% annual rate, its smallest gain in more than a year, though revised up from the 0.1% previously estimated. The price index for GDP, which measures prices paid by U.S. residents, rose 3.3% in the second quarter, 0.1% more than previously estimated, but down from the 4.0% rise reported for the first quarter. But when excluding food and energy prices, which jumped in the second quarter, the price index for gross domestic purchases increased 2.6% in the second quarter compared to 2.4% in the first.
Federal government expenditures grew 2.0% in the second quarter after declining 0.4% in the first, with national defense spending climbing 7.1%. However, the debt deal passed earlier this month issued significant cuts to the Pentagon’s budget and defense spending, so that number could again decline, as it did in the first quarter of this year.