WASHINGTON – Real gross domestic product expanded 1.3% at an annual rate in the second quarter, well below economists' estimates, while consumer spending was the weakest in two years, the Commerce Department reported Friday.
The first quarter GDP was revised sharply lower to a 0.4% increase annually from 1.9% gain reported last month. Today's report included data revision for the last three years. The economy expanded 3.0% in 2010 and contracted 3.5% in 2009 and contracted 0.3% in 2008, the new figures show, revealing the recession was much deeper than originally estimated.
For the second quarter of this year ending June 30, consumer spending increased 0.1%, the smallest increase since spending fell in the second quarter of 2009. Spending for durable goods dropped 4.4% as motor vehicle and parts purchases decreased 4.2%, the first decline in six quarters. Consumption increased 2.1% in the first quarter, revised lower from 2.2% reported last month.
Second quarter business investment increased 7.1% following a 3.8% gain in the first quarter. Business inventory investment increased slightly for the quarter.
Growth in imports increased just 1.3%. Imports increased 8.3% in the first quarter and fell 2.3% in the fourth quarter of 2010.
Exports increased 6.0% in the second quarter. The trade deficit for the quarter was $586.7 billion. The deficit for the first quarter was revised higher to $571.3 billion from $562.5 billion.
Government spending contracted for the third straight quarter, falling 1.1%. State and local government spending declined 3.4% for the second quarter in a row. Federal spending for nondefense items fell 7.3%, the largest decline since the fourth quarter of 2006.
Economists expected second quarter GDP would increase 1.8%, according to the median estimate from Thomson Reuters.
Core personal consumption expenditures, excluding food and energy goods, increased 2.1% on an annual basis in the second quarter. Core PCE gained 1.6% in the first quarter.
Economists expected core PCE would rise 2.2%, according to the median estimate.
