WASHINGTON – Gross domestic product was revised higher in its final estimate to a 0.7% contraction in the second quarter, reflecting greater software purchases, the Commerce Department reported today.
The GDP has contracted for four consecutive quarters. The recession, which began in December 2007, has been the longest in the post-WWII period. However, Federal Reserve Chairman Ben S. Bernanke has indicated that the recession has most likely ended.
Personal consumption, the largest component of GDP, was revised higher to a 0.9% drop from a 1.0% drop that was reported in the previous GDP revision.
With the revised software purchases, nonresidential fixed investment decreased 9.6% in the second quarter from a 13.5% decline that was previously reported. Nonresidential fixed investment subtracted 1.01 percentage points from GDP growth, revised lower from a 1.15 percentage point subtraction.
This report is the third revision for second quarter GDP, which ended June 30. The previous revision, released on Aug. 27, said GDP contracted 1.0% in the second quarter. In the first quarter, GDP contracted 6.4%.
Core personal consumption expenditures, which exclude food and energy prices, the Federal Reserve’s preferred measure of inflation, increased 2.0% in the second quarter, unchanged from the previous estimate.
Economists polled by Thomson Reuters expected GDP to contract 1.1% and for the core PCE index to grow 2.0%, according to the median estimate.
Business inventories dropped at a $160.2 billion annual rate in the quarter and subtracted 1.42 percentage points from GDP growth.
The gap between exports and imports shrank to $330.4 billion at an annual rate as imports declined 14.7% in the quarter.
Federal, state and local government spending increased 6.7% in the second quarter and contributed 1.33 percentage points to GDP growth.
The first GDP figures for the third quarter, which ends today, will be released on Oct. 29.
