Real gross domestic product expanded at a 1.7% annual rate in the second quarter of 2010, revised slightly higher on stronger inventory and consumer spending, the Commerce Department reported today.
Consumer spending, which accounts for about 70% of real GDP, grew 2.2% in the second quarter, revised higher from the 2.0% increase reported last month. It was the strongest quarter for consumer spending growth in more than three years.
This was the third and final estimate for the second quarter GDP. The previous, preliminary estimate reported a 1.6% annual rate increase in GDP. Still, the 1.7% growth rate is the smallest since the third quarter of 2009. GDP grew at a 3.7% annual rate in the first quarter.
Imports were revised higher, continuing to drag down GDP growth. Imports increased 33.5% for the quarter, up from 32.4% reported last month. Imports, which subtract from GDP growth, slashed 4.58 percentage points from total real GDP expansion, an increase from the 4.45 percentage point cut reported in the preliminary GDP report.
The trade deficit between imports and exports widened from the preliminary estimate by $3.3 billion to $539.3 billion. Export growth was unchanged from the previous estimate.
Business investment spending was revised higher to a 26.2% increase from 25.0%. Private inventories increased, adding 0.82 percentage point to GDP growth from 0.63 percentage point reported last month.
Core personal consumption expenditures, the Federal Reserve’s preferred measure of inflation, was revised lower to a 1.0% increase from 1.1% reported last month. It was the smallest core PCE increase since the first quarter of 2009.
Economists estimated GDP would increase 1.6% for the quarter and that core PCE would increase 1.1%, according to the median estimate from Thomson Reuters.
Government spending increased 3.9% annually, down from 4.3% reported last month. State and local spending growth was revised lower to a 0.6% increase from 1.2%.
Current production corporate profits for the second quarter were revised lower to an increase of $47.5 billion, or 3.0%, down from a $72.7 billion increase.
The Commerce Department’s first estimate for third quarter GDP will be released on Oct. 29.
