WASHINGTON — The annual growth rate of the nation’s economy was revised downward to 1.6% in the preliminary estimate for the second quarter due to greater imports and reduced inventory investment and exports, the Commerce Department reported Friday. Second-quarter growth initially was estimated at 2.4% on July 30.
“This downward revision shows that the economy lost momentum, especially at the end of the quarter,” Steven Wood, chief economist at Insight Economics, said in a research note. “This suggests that it will be difficult for Q3 growth to accelerate sharply, especially with the inventory cycle largely complete, federal fiscal stimulus diminishing, and state and local government fiscal contraction.”
Consumer spending, which accounts for about 70% of real gross domestic product, was revised upward to a 2.0% annual growth rate for the quarter, from the 1.6% initial estimate. Increased electricity and natural gas usage lifted consumer spending, which rose by a 1.9% annual pace in the first quarter.
Real GDP increased 3.7% in the first quarter after expanding 5.0% in the fourth quarter of 2009.
Core personal consumption expenditures were unchanged from the advance estimate of a 1.1% increase for the quarter. It is the smallest increase since the first quarter of 2009.